Table of Contents

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


  

FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER

 
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November 2014


  

FRESENIUS MEDICAL CARE AG & Co. KGaA
(Translation of registrant's name into English)

 
  

Else-Kröner Strasse 1
61346 Bad Homburg
Germany
(Address of principal executive offices)


  

        Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
       Form 20-F     ý         Form 40-F     o

        Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

        Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             

        Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
       Yes     o                     No     ý

        If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 –               .

   


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FRESENIUS MEDICAL CARE AG & Co. KGaA

 
  Page

Interim Report of Financial Condition and Results of Operations for the three and nine months ended September 30, 2014 and 2013

 

 

FINANCIAL INFORMATION

 

 

Management's Discussion and Analysis

 

 

Forward-looking Statements

 

1

Financial Condition and Results of Operations

 

2

Balance Sheet Structure

 

24

Outlook

 

25


Financial Statements


 


 

Consolidated Statements of Income

 

26

Consolidated Statements of Comprehensive Income

 

27

Consolidated Balance Sheets

 

28

Consolidated Statements of Cash Flows

 

29

Consolidated Statement of Shareholders' Equity

 

30

Notes to Consolidated Financial Statements

 

31

Quantitative and Qualitative Disclosures About Market Risk

 

61

Controls and Procedures

 

62


OTHER INFORMATION


 


 

Legal and Regulatory Matters

 

63

Exhibits

 

64

Signatures

 

65

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

FINANCIAL INFORMATION


Management's Discussion and Analysis

Forward-looking Statements

       This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this report, the words "outlook", "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated, and future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements contained elsewhere in this report. We have based these forward-looking statements on current estimates and assumptions made to the best of our knowledge. By their nature, such forward-looking statements involve risks, uncertainties, assumptions and other factors which could cause actual results, including our financial condition and profitability, to differ materially and be more negative than the results expressly or implicitly described in or suggested by these statements. Moreover, forward-looking estimates or predictions derived from third parties' studies or information may prove to be inaccurate. Consequently, we cannot give any assurance regarding the future accuracy of the opinions set forth in this report or the actual occurrence of the developments described herein. In addition, even if our future results meet the expectations expressed here, those results may not be indicative of our performance in future periods.

       These risks, uncertainties, assumptions, and other factors that could cause actual results to differ from our projected results include, among others, the following:

changes in governmental and commercial insurer reimbursement for our complete products and services portfolio, including the expanded United States ("U.S.") Medicare reimbursement system for dialysis services;

changes in utilization patterns for pharmaceuticals and in our costs of purchasing pharmaceuticals;

the outcome of ongoing government and internal investigations;

risks relating to compliance with the myriad government regulations applicable to our business including, in the U.S., the Anti-Kickback Statute, the False Claims Act, the Stark Law and the Foreign Corrupt Practices Act, the Food, Drug and Cosmetic Act and comparable regulatory regimes in many of the 120 countries in which we supply dialysis services and / or products;

the influence of commercial insurers and managed care organizations;

the impact of recently enacted and possible future health care reforms;

product liability risks;

the outcome of ongoing potentially material litigation;

risks relating to the integration of acquisitions and our dependence on additional acquisitions;

the impact of currency fluctuations;

introduction of generic or new pharmaceuticals that compete with our pharmaceutical products;

changes in raw material and energy costs or the ability to procure raw materials; as well as

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

collectability of our receivables due to the financial stability and liquidity of our governmental and commercial payors.

       Important factors that could contribute to such differences are noted in the "Overview" section below, in Note 12 of the Notes to Consolidated Financial Statements (unaudited), "Commitments and Contingencies" included in this report, in Note 20 of the Notes to Consolidated Financial Statements, "Commitments and Contingencies" included in our Annual Report on Form 20-F for the year ended December 31, 2013, and under "Risk Factors" and elsewhere in that report.

       Our business is also subject to other risks and uncertainties that we describe from time to time in our public filings. Developments in any of these areas could cause our results to differ materially from the results that we or others have projected or may project.

       Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that are the basis of our financial statements. The actual accounting policies, the judgments made in the selection and application of these policies and the sensitivities of reported results to changes in accounting policies, assumptions and estimates, are factors to be considered along with our financial statements and the discussion under "Results of Operations" below. There have been no significant changes during the nine months ended September 30, 2014 to the items disclosed within the critical accounting policies and estimates in Item 5, "Operating and Financial Review and Prospects – Critical Accounting Policies" in our Annual Report on Form 20-F for the year ended December 31, 2013.


Financial Condition and Results of Operations

       You should read the following discussion and analysis of the results of operations of Fresenius Medical Care AG & Co. KGaA ("FMC-AG & Co. KGaA," or the "Company") and its subsidiaries in conjunction with our unaudited consolidated financial statements and related notes contained elsewhere in this report and our disclosures and discussions in our Annual Report on Form 20-F for the year ended December 31, 2013. The results within this discussion and analysis are unaudited. In this report, "FMC-AG & Co. KGaA," or the "Company," "we," "us" or "our" refers to the Company or the Company and its subsidiaries on a consolidated basis, as the context requires. The term "North America Segment" refers to our North America operating segment and the term "International Segment" refers to the combination of our "EMEALA" (Europe, Middle East, Africa, and Latin America) operating segment and our Asia-Pacific operating segment. The term "Constant Currency" or at "Constant Exchange Rates" means that we have translated local currency revenues for the current reporting period into U.S. dollars using the same average foreign currency exchange rates for the conversion of revenues into U.S. dollars that we used to translate local currency revenues for the comparable reporting period of the prior year.


Overview

       We operate in both the field of dialysis care and the field of dialysis products for the treatment of end-stage renal disease ("ESRD"). Our dialysis care business, in addition to providing dialysis treatments to patients with ESRD, includes pharmacy services, vascular access surgery services, laboratory testing services, physician services, hospitalist services, health plan services and urgent care services (together, "Care Coordination"). Our dialysis products business includes manufacturing and distributing products for the treatment of ESRD. In the U.S., the Company also provides inpatient dialysis services as well as other services under contract to hospitals. We estimate that providing dialysis and distributing dialysis products

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

represents a worldwide market of approximately $75 billion with expected annual worldwide market growth of approximately 4 percent, adjusted for currency. Patient growth results from factors such as the aging population and increased life expectancies; shortage of donor organs for kidney transplants; increasing incidence of kidney disease and better treatment of and survival of patients with diabetes and hypertension, which frequently precede the onset of chronic kidney disease; improvements in treatment quality, which prolong patient life; and improving standards of living in developing countries, which make life-saving dialysis treatment available. Key to continued growth in revenue is our ability to attract new patients in order to increase the number of treatments performed each year. For that reason, we believe the number of treatments performed each year is a strong indicator of continued revenue growth and success.

       In addition, the reimbursement and ancillary services utilization environment significantly influences our business. The majority of treatments are paid for by governmental institutions such as the Centers for Medicare & Medicaid Services ("CMS") in the United States. As a consequence of the pressure to decrease health care costs, government reimbursement rate increases have been historically and are expected in the future to be limited. While we have generally experienced stable reimbursement globally, including the balancing of unfavorable reimbursement changes in certain countries with favorable changes in other countries, the stability of reimbursement in the U.S. has been affected by (i) the implementation of the ESRD prospective payment system ("ESRD PPS") in the U.S. in January 2011, (ii) the U.S. federal government across the board spending cuts in payments to Medicare providers commonly referred to as U.S. Sequestration (as defined below), (iii) commencing on January 1, 2014, the reduction to the ESRD PPS rate to account for the decline in utilization of certain drugs and biologicals associated with dialysis (see discussion of the American Taxpayer Relief Act of 2012 ("ATRA") below) and (iv) the enactment of the Protecting Access to Medicare Act of 2014 ("PAMA") (see discussion of PAMA below). In the future we expect to experience generally stable reimbursements for dialysis services globally.

       With the enactment in the U.S. of the Medicare Improvements for Patients and Providers Act of 2008 ("MIPPA"), Congress created the ESRD PPS pursuant to which CMS reimburses dialysis facilities with a single payment for each dialysis treatment, inclusive of (i) all items and services included in the pre-2011 ESRD composite rate, (ii) oral vitamin D analogues, oral levocarnitine (an amino acid derivative) and all erythropoietin stimulating agents ("ESAs") and other pharmaceuticals (other than vaccines and certain other oral drugs) furnished to ESRD patients that were previously reimbursed separately under Part B of the Medicare program, (iii) most diagnostic laboratory tests and (iv) certain other items and services furnished to individuals for the treatment of ESRD. The base ESRD PPS payment is subject to case mix adjustments that take into account individual patient characteristics (e.g., age, body surface area, body mass, time on dialysis) and certain co-morbidities. The base payment is also adjusted for (i) certain high cost patient outliers due to unusual variations in medically necessary care, (ii) disparately high costs incurred by low volume facilities relative to other facilities, (iii) provision of home dialysis training and (iv) wage-related costs in the geographic area in which the provider is located.

       The ESRD PPS payment amount is also subject to annual adjustment based on increases in the costs of a "market basket" of certain healthcare items and services less a productivity adjustment.

       In addition to creating the ESRD PPS, MIPPA also created the ESRD quality incentive program ("QIP") which began affecting payments starting January 1, 2012. Dialysis facilities that fail to achieve quality standards established by CMS could have payments reduced by up to 2 percent. Performance on specified measures in a fiscal year affects payments two fiscal years later. For instance, the payments we receive during 2014 will be affected by our performance measures from 2012. Based on our performance from 2010 through 2012, the QIP's impact on our results through 2014 is immaterial. The initial QIP measures for 2010 and 2011 focused on anemia management (measured by hemoglobin level) and dialysis

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

adequacy (measured by Urea Reduction Ratio or URR). For payment year 2014, CMS adopted four additional measures: prevalence of catheter and A/V fistula use, reporting of infections to the Centers for Disease Control and Prevention, administration of patient satisfaction surveys and monthly monitoring of phosphorus and calcium levels. For payment year 2015, CMS will continue all of the 2014 QIP measures except URR dialysis adequacy, expand the scope of infection reporting and mineral metabolism reporting, and add four new measures. Payment year 2015 added measures consist of three new clinical measures (hemodialysis adequacy for adult patients, hemodialysis adequacy for pediatric patients and peritoneal dialysis adequacy for adult patients), and one new reporting measure (anemia management reporting). For payment year 2016, CMS will continue all of the 2015 QIP measures and add two new clinical measures (proportion of patients with hypercalcemia and dialysis-related infections reported to the Center for Disease Control and Prevention's National Health Safety Network by ESRD facilities treating patients on an in-center basis). For payment year 2017, CMS will continue ten of the eleven 2016 QIP measures (a total of 7 clinical measures and 3 reporting measures), remove the anemia management clinical measure (hemoglobin greater than 12 g/dL), revise the patient satisfaction survey reporting measure, and adopt one new clinical measure that addresses care coordination (measured by a Standardized Readmission Ratio or SRR). For payment year 2018, CMS will continue all of the measures proposed for payment year 2017 (with the exception of changing the patient satisfaction survey to a clinical measure), and to add five new measures consisting of two clinical measures (evaluating transfusions in the ESRD population as measured by a Standardized Transfusion Ratio or STrR and pediatric peritoneal dialysis adequacy) and three reporting measures (pain assessment, clinical depression screening, and healthcare personnel influenza vaccinations).

       The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, "ACA") implements broad healthcare system reforms, including (i) provisions to facilitate access to affordable health insurance for all Americans, (ii) expansion of the Medicaid program, (iii) an industry fee on pharmaceutical companies that began in 2011 based on sales of brand name pharmaceuticals to government healthcare programs, (iv) a 2.3 percent excise tax on manufacturers' medical device sales starting in 2013, (v) increases in Medicaid prescription drug rebates effective January 1, 2010, (vi) commercial insurance market reforms that protect consumers, such as bans on lifetime and annual limits, coverage of pre-existing conditions, limits on administrative costs, and limits on waiting periods, (vii) provisions encouraging integrated care, efficiency and coordination among providers and (viii) provisions for reduction of healthcare program waste and fraud. ACA does not modify the dialysis reimbursement provisions of MIPPA, except to change the annual update provision by substituting a productivity adjustment to the market basket rate of increase for a MIPPA provision that specified a one percentage point reduction in the market basket rate of increase.

       On August 2, 2011, the Budget Control Act ("BCA") was enacted, raising the U.S. debt ceiling and putting into effect a series of actions for deficit reduction. Pursuant to the BCA, automatic across-the-board spending cuts over nine fiscal years (2013-2021), projected to total $1.2 trillion for all U.S. Federal government programs required under the BCA became effective as of March 1, 2013 and were implemented on April 1, 2013 for CMS reimbursement to providers. The Bipartisan Budget Act of 2013 extended the cuts to mandatory spending programs such as Medicare for an additional two years. The reduction in Medicare payments to providers and suppliers is limited to one adjustment of no more than 2 percent through 2022 (the "U.S. Sequestration"), rising to 2.9 percent for the first half of FY 2023 and dropping to 1.11 percent for the second half of FY 2023. Pursuant to PAMA, the reductions pursuant to U.S. Sequestration for the first six months of 2024 will be 4 percent, and there will be no reductions for the second six months of 2024. The Medicare sequestration reimbursement reduction is independent of annual inflation update mechanisms, such as the market basket update pursuant to the ESRD PPS.

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

       The impact of the U.S. Sequestration on our dialysis care revenues from Medicare, beginning in the second quarter of 2013, resulted in a decrease of approximately $18 million in operating income for the nine months ended September 30, 2014 driven by the absence of U.S. Sequestration in the first quarter of 2013. The impact of the U.S. Sequestration for the last twelve months has resulted in an aggregate reduction to our operating income of $74 million.

       ATRA directed CMS to reduce the ESRD PPS payment rate, effective January 1, 2014, to account for changes in the utilization of certain drugs and biologicals that are included in the ESRD PPS. In making such reduction, the law requires CMS to use the most recently available pricing data for such drugs and biologicals. On November 22, 2013, CMS issued the final rule regarding the 2014 ESRD PPS rate. The base rate per treatment was reduced from $240.36 to $239.02 for 2014. This change reflected (a) a bundled market basket increase of 3.2 percent, reduced by an estimated multifactor productivity adjustment of 0.4 percent; (b) the application of a wage index budget neutrality factor and a home dialysis training add-on budget neutrality factor; and (c) the application of a portion of an overall reduction in the base rate ($8.16 per treatment) to account for a decrease in the historical utilization of certain ESRD-related drugs and biologicals from 2007 to 2012. As set forth in the November 2013 final rule, CMS will phase in the drug utilization adjustment mandated by ATRA, which CMS estimates will total $29.93 per treatment, over three to four years. CMS intended that the portion of the reduction that will be applied in 2014 and 2015 will largely offset the net market basket increases in average payments to ESRD facilities as a whole resulting in essentially unchanged reimbursement rates from 2013 to 2015. CMS stated that it would consider in 2015 whether to apply the remainder of the $29.93 reduction in 2016 alone or spread it out over 2016 and 2017.

       On April 1, 2014, PAMA was signed into law. This law modifies ATRA such that dialysis reimbursement for 2015 is intended to equal that for 2014. In addition, the reimbursement reductions mandated by ATRA for 2016 and 2017 have been eliminated. Instead, the market basket updates net of the productivity adjustment for each of 2016 and 2017 have been reinstated, though they will be reduced by 1.25 percent each year. For 2018, the market basket update net of the productivity adjustment will be reduced by 1 percent. In addition, the law mandates that ESRD-related drugs with only an oral form, including our phosphate binder PhosLo®, are excluded from the ESRD PPS and separately reimbursed until 2024. Finally, under the law, the reductions pursuant to U.S. Sequestration for the first six months of 2024 will be 4 percent, and there will be no reductions for the second six months of 2024.

       On October 31, 2014, CMS issued the final rule updating Medicare payment policies and rates under the ESRD PPS for dialysis services provided on or after January 1, 2015. For calendar year 2015, CMS increases the ESRD PPS base rate to $239.43. Following the requirements of PAMA, this amount reflects elimination of the drug utilization adjustment, the application of a 0.0 percent market basket update net of the productivity adjustment, and the application of the proposed wage index budget-neutrality adjustment factor.

       Any significant decreases in Medicare reimbursement rates could have material adverse effects on our provider business and, because the demand for dialysis products is affected by Medicare reimbursement, on our products business. To the extent that increases in operating costs that are affected by inflation, such as labor and supply costs, are not fully reflected in a compensating increase in reimbursement rates, our business and results of operations may be adversely affected.

       On February 4, 2013, CMS announced plans to test a new Comprehensive ESRD Care Program and issued a solicitation for applications. CMS stated that it sought to work with up to 15 healthcare provider groups comprised of dialysis clinics and nephrologists, also known as ESRD Seamless Care Organizations

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

("ESCOs"), to test a new system of payment and care delivery that seeks to deliver better health outcomes for ESRD patients while potentially lowering CMS's costs. ESCOs that achieve the program's minimum quality thresholds and generate reductions in CMS's cost of care above certain thresholds for the ESRD patients covered by the ESCO will receive a share of the cost savings. ESCOs that include dialysis chains with more than 200 facilities are required to share in the risk of cost increases and reimburse CMS a share of any such increases. Organizations must apply and be approved by CMS to participate in the program. In August 2013, we submitted an application to participate in the program as an ESCO. Following submission of our application, CMS announced that it would suspend review of all applications and reopen its request for application in the winter of 2014 to solicit additional participation.

       Following receipt of stakeholder feedback, CMS issued revised specifications for the Comprehensive ESRD Care Program in March of 2014. Under the revised specifications, large dialysis organizations were required to submit non-binding applications on or before June 23, 2014, while small dialysis organizations have until September 2014 to apply. We submitted non-binding applications for several different markets across the United States which CMS is currently reviewing. CMS is expected to make a determination on applications from large dialysis organizations in the coming months. Once an ESCO application is approved, CMS and the prospective ESCO will share data and enter into negotiations on the final terms of the shared savings arrangement. Should an agreement be executed, CMS intends that the ESCO will go into effect in January 2015.

       The Bundled Payments for Care Improvement initiative (BPCI) is a CMS three year pilot initiative with bundled payments for the individual services furnished to Medicare beneficiaries during a single episode of illness or course of treatment, including acute inpatient hospital services, physician services, and post-acute services. On January 31, 2013, CMS announced the health care organizations selected to participate in BPCI, which include our subsidiary, Sound Inpatient Physicians, Inc. Sound Physicians is currently planning and preparing to commence participation under BPCI in 2015 in several markets.

       Fresenius Medical Care Holdings, Inc. ("FMCH") has an Epogen supply agreement with Amgen which expires at the end of this year. FMCH is engaged in negotiations to renew this agreement and expects to execute a new multi-year ESA supply agreement with Amgen prior to the expiration of the current agreement. Any failure to reach an agreement that gives FMCH continued access to Amgen ESAs at reasonable pricing could have a material adverse impact on our results of operations.

       We have identified three operating segments, North America Segment, EMEALA, and Asia-Pacific, which were determined based upon how we manage our businesses. All segments are primarily engaged in providing dialysis care services and distributing products and equipment for the treatment of ESRD. For reporting purposes, we have aggregated the EMEALA and Asia-Pacific operating segments as the "International Segment." We aggregated these operating segments due to their similar economic characteristics. These characteristics include same services provided and same products sold, the same type of patient population, similar methods of distribution of products and services and similar economic environments. Our General Partner's management board member responsible for the profitability and cash flow of each segment's various businesses supervises the management of each operating segment. The accounting policies of the segments are the same as those we apply in preparing our consolidated financial statements using accounting principles generally accepted in the United States of America ("U.S. GAAP").

       Our management evaluates each segment using measures that reflect all of the segment's controllable revenues and expenses. With respect to the performance of business operations, our management believes that the most appropriate U.S. GAAP measures are revenue, operating income and operating income

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for the three and nine months ended September 30, 2014 and 2013

margin. We do not include income taxes as we believe this is outside the segments' control. Financing is a corporate function which our segments do not control. Therefore, we do not include interest expense relating to financing as a segment measurement. Similarly, we do not allocate certain costs which relate primarily to certain headquarters overhead charges, including accounting and finance, etc. ("Corporate"), because we believe that these costs are also not within the control of the individual segments. Production of products, production asset management, quality management and procurement are centrally managed at Corporate by Global Manufacturing Operations. The Company's global research and development is also centrally managed at Corporate. These Corporate activities do not fulfill the definition of a segment. Products are transferred to the segments at cost; therefore no internal profit is generated. The associated internal revenues for the product transfers and their elimination are recorded as Corporate activities (See Note 15 of the Notes to Consolidated Financial Statements (unaudited) "Segment and Corporate Information" found elsewhere in this report). Capital expenditures for production are based on the expected demand of the segments and consolidated profitability considerations. In addition, certain revenues, investments and intangible assets, as well as any related expenses, are not allocated to a segment but accounted for as Corporate. Accordingly, all of these items are excluded from our analysis of segment results and are discussed below in our consolidated results of operations.

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013


Results of Operations

       The following tables summarize our financial performance and certain operating results by principal reporting segment and Corporate for the periods indicated. Inter-segment revenue primarily reflect sales of medical equipment and supplies. We prepared the information using a management approach, consistent with the basis and manner in which our management internally disaggregates financial information to assist in making internal operating decisions and evaluating management performance.

 
  For the three months
ended September 30,
  For the nine months
ended September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions)
  (in millions)
 

Total revenue

                         

North America

  $ 2,713   $ 2,439   $ 7,630   $ 7,104  

International

    1,386     1,222     3,843     3,619  

Corporate

    17     8     44     25  
                   

Totals

    4,116     3,669     11,517     10,748  
                   

Inter-segment revenue

                         

North America

    3     3     6     5  

International

    -     -     -     -  
                   

Totals

    3     3     6     5  
                   

Total net revenue

                         

North America

    2,710     2,436     7,624     7,099  

International

    1,386     1,222     3,843     3,619  

Corporate

    17     8     44     25  
                   

Totals

    4,113     3,666     11,511     10,743  
                   

Operating income

                         

North America

    413     413     1,149     1,170  

International

    269     214     692     624  

Corporate

    (92 )   (70 )   (250 )   (199 )
                   

Totals

    590     557     1,591     1,595  
                   

Interest income

    12     9     40     26  

Interest expense

    (111 )   (112 )   (334 )   (336 )

Income tax expense

    (162 )   (148 )   (440 )   (421 )
                   

Net Income

    329     306     857     864  

Less: Net Income attributable to Noncontrolling interests

    (58 )   (33 )   (147 )   (103 )
                   

Net Income attributable to shareholders of FMC-AG & Co. KGaA

  $ 271   $ 273   $ 710   $ 761  
                   
                   

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

Three months ended September 30, 2014 compared to three months ended September 30, 2013

Consolidated Financials

Key Indicators for Consolidated Financial Statements  
 
  For the three months ended
September 30,
  Change in %  
 
  as
reported
  at Constant
Exchange
Rates
(1)
 
 
  2014   2013  

Revenue in $ million

 

 

4,113

 

 

3,666

 

 

12%

 

 

13%

 

Number of treatments

 

 

10,893,624

 

 

10,285,155

 

 

6%

 

 

 

 

Same market treatment growth in %

 

 

3.6%

 

 

4.0%

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

 

31.3%

 

 

31.9%

 

 

 

 

 

 

 

Selling, general and administrative costs as a % of revenue

 

 

16.3%

 

 

15.9%

 

 

 

 

 

 

 

Operating income in $ million

 

 

590

 

 

557

 

 

6%

 

 

 

 

Operating income margin in %

 

 

14.3%

 

 

15.2%

 

 

 

 

 

 

 

Net income attributable to shareholders of FMC-AG & Co. KGaA in $ million

 

 

271

 

 

273

 

 

(1%

)

 

 

 

Basic earnings per share in $

 

 

0.89

 

 

0.91

 

 

(1%

)

 

 

 

(1) For further information on Constant Exchange Rates, see "Non-U.S. GAAP Measures for Presentation – Constant Currency" below.

       Net dialysis care revenue increased by 14% to $3,197 million (15% increase at Constant Exchange Rates) for the three months ended September 30, 2014 from $2,813 million in the same period of 2013, mainly due to contributions from acquisitions (9%), growth in same market treatments (4%) and increases in organic revenue per treatment (2%), partially offset by the negative impact of exchange rate fluctuations (1%). Included in our net dialysis care revenue is Care Coordination revenue in the U.S. of $328 million and $159 million for the three months ended September 30, 2014 and 2013, respectively.

       Treatments increased by 6% for the three months ended September 30, 2014 as compared to the same period in 2013. The increase is due to same market treatment growth (4%) and acquisitions (3%), partially offset by the effect of closed or sold clinics (1%).

       At September 30, 2014, we owned, operated or managed (excluding those managed but not consolidated in the U.S.) 3,349 clinics compared to 3,225 clinics at September 30, 2013. During the three months ended September 30, 2014, we acquired 16 clinics, opened 17 clinics and combined or closed 19 clinics. The number of patients treated in clinics that we own, operate or manage (excluding patients of clinics managed but not consolidated in the U.S.) increased by 7% to 283,135 at September 30, 2014 from 265,824 at September 30, 2013.

       Dialysis product revenue increased by 7% (7% increase at Constant Exchange Rates) to $916 million as compared to $853 million in the same period of 2013. The increase at Constant Exchange Rates was driven by increased sales of dialyzers, bloodlines, hemodialysis solutions and concentrates, products for

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

acute care treatments and devices manufactured under a five-year contract with a Fresenius SE company, partially offset by lower sales of machines.

       The decrease in gross profit margin to 31.3% from 31.9% primarily reflects the decrease in the North America Segment, partially offset by an increase in the International Segment. The decrease in the North America Segment was mainly due to higher personnel expense, growth in the lower margin Care Coordination businesses and the impact from ATRA reductions on the ESRD PPS payment rate, partially offset by a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors. The increase in the International Segment was due to favorable business growth in Asia-Pacific.

       SG&A expenses increased to $670 million in the three months ended September 30, 2014 from $585 million in the same period of 2013. SG&A expenses as a percentage of sales increased to 16.3% for the three months of 2014 in comparison with 15.9% in the same period of 2013 due to increases in Corporate and the North America Segment and a decrease in the International Segment. The increase in Corporate was mainly driven by costs related to the closing of a manufacturing plant, higher legal and consulting expenses and higher costs related to members of the Management Board of Management AG, the Company's management board ("Management Board"). The increase in the North America Segment was mainly driven by higher consulting and legal expenses, the impact from ATRA reductions on the ESRD PPS payment rate and slightly higher personnel expense, partially offset by a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors. The decrease in the International Segment was due to a favorable foreign exchange effect.

       Research and development ("R&D") decreased to $30 million for the three months ended September 30, 2014 from $33 million for the same period of 2013.

       For the three months ended September 30, 2014, we had a $1 million loss from the sale of FMC-AG & Co. KGaA dialysis clinics as compared to a $1 million gain from the sale of dialysis clinics for the three months ended September 30, 2013.

       Income from equity method investees decreased to $3 million for the three months ended September 30, 2014 from $5 million for the same period of 2013 due to decreased income from the Vifor Fresenius Medical Care Renal Pharma Ltd. ("VFMCRP") renal pharmaceuticals joint venture.

       Operating income increased to $590 million for the three months ended September 30, 2014 from $557 million for the same period in 2013. Operating income margin decreased to 14.3% for the three months ended September 30, 2014 as compared to 15.2% for the same period in 2013 as a result of a decrease in gross profit margin and higher SG&A as a percentage of revenue, as discussed above.

       Interest expense decreased by 1% to $111 million for the three months ended September 30, 2014 from $112 million for the same period in 2013 due to a higher portion of debt with lower interest rates, partially offset by an increase in the average debt level during the year. Interest income increased to $12 million for the three months ended September 30, 2014 from $9 million for the same period in 2013 mainly as a result of interest income from interest-bearing notes receivables.

       Income tax expense increased to $162 million for the three months ended September 30, 2014 from $148 million for the same period in 2013. The effective tax rate increased to 32.9% from 32.6% for the same period of 2013.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

       Net income attributable to noncontrolling interests for the three months ended September 30, 2014 increased to $58 million from $33 million for the same period of 2013 primarily driven by the creation of new joint ventures in the North America Segment in the fourth quarter of 2013.

       Net income attributable to shareholders of FMC-AG & Co. KGaA for the three months ended September 30, 2014 decreased by 1% to $271 million from $273 million for the same period in 2013 as a result of the combined effects of the items discussed above.

       Basic earnings per share decreased by 1% for the three months ended September 30, 2014 to $0.89 as compared with $0.91 in 2013 due to the decrease in net income attributable to shareholders of FMC-AG & Co. KGaA above. The average weighted number of shares outstanding for the period was approximately 302.7 million in 2014 (301.3 million in 2013).

       We employed 97,327 people (full-time equivalents) as of September 30, 2014 compared to 89,282 as of September 30, 2013, an increase of 9%, primarily due to overall growth in our business and acquisitions.

       The following discussions pertain to the North America Segment and the International Segment and the measures we use to manage these segments.


North America Segment

Key Indicators for North America Segment  
 
  For the three months
ended September 30,
   
 
 
  Change in %  
 
  2014   2013  

Revenue in $ million

 

 

2,710

 

 

2,436

 

 

11%

 

Number of treatments

 

 

6,741,392

 

 

6,509,064

 

 

4%

 

Same market treatment growth in %

 

 

3.5%

 

 

3.5%

 

 

 

 

Operating income in $ million

 

 

413

 

 

413

 

 

(0%

)

Operating income margin in %

 

 

15.2%

 

 

17.0%

 

 

 

 

Revenue

       Net dialysis care revenue increased for the three months ended September 30, 2014 by 12% to $2,498 million from $2,224 million in the same period of 2013. This increase was driven by contributions from acquisitions (6%), same market treatment growth (3%), and increases in organic revenue per treatment (3%). Included in our net dialysis care revenue is Care Coordination revenue in the U.S. of $328 million and $159 million for the three months ended September 30, 2014 and 2013, respectively.

       Treatments increased by 4% for the three months ended September 30, 2014 as compared to the same period in 2013 mostly due to same market treatment growth (3%) and acquisitions (1%). At September 30,

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

2014, 174,335 patients (a 3% increase over September 30, 2013) were being treated in the 2,158 clinics that we own or operate in the North America Segment, compared to 168,893 patients treated in 2,116 clinics at September 30, 2013. Average North America Segment revenue per treatment, which includes Canada and Mexico, before bad debt expense, was $363 for the three months ended September 30, 2014 and $352 in the same period in 2013. In the U.S., the average revenue per treatment was $371 for the three months ended September 30, 2014 and $359 for the same period in 2013. The increase in the U.S. was mainly attributable to increased revenue related to pharmacy and laboratory testing services, a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors, mainly due to payor mix, partially offset by impact from ATRA reductions on the ESRD PPS payment rate and decreased revenue for renal pharmaceuticals.

       Dialysis product revenue remained flat at $212 million for the three months ended September 30, 2014 as compared to the same period in 2013. This was driven by higher sales of dialyzers and renal pharmaceuticals, fully offset by lower sales of machines.

Operating Income

       Operating income remained flat at $413 million for the three months ended September 30, 2014 as compared to the same period in 2013. Operating income margin decreased to 15.2% for the three months ended September 30, 2014 from 17.0% for the same period in 2013, due to higher personnel expense, the impact from ATRA reductions on the ESRD PPS payment rate, growth in lower margin Care Coordination businesses, as well as higher consulting and legal expenses, partially offset by favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors. Cost per treatment for the North America Segment increased to $299 for the three months ended September 30, 2014 as compared to $287 for the same period of 2013. Cost per treatment in the U.S. increased to $304 for the three months ended September 30, 2014 from $293 in the same period of 2013.


International Segment

Key Indicators for International Segment  
 
  For the three months ended
September 30,
  Change in %  
 
  as
reported
  at Constant
Exchange
Rates
(1)
 
 
  2014   2013  

Revenue in $ million

 

 

1,386

 

 

1,222

 

 

13%

 

 

16%

 

Number of treatments

 

 

4,152,232

 

 

3,776,091

 

 

10%

 

 

 

 

Same market treatment growth in %

 

 

3.9%

 

 

4.8%

 

 

 

 

 

 

 

Operating income in $ million

 

 

269

 

 

214

 

 

26%

 

 

 

 

Operating income margin in %

 

 

19.4%

 

 

17.5%

 

 

 

 

 

 

 

(1) For further information on Constant Exchange Rates, see "Non-U.S. GAAP Measures for Presentation – Constant Currency" below.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

Revenue

       Including the effects of acquisitions, European region revenue increased 6% (7% increase at Constant Exchange Rates) to $784 million, Latin America region revenue increased 5% (18% increase at Constant Exchange Rates) to $215 million, and Asia-Pacific region revenue increased 40% (41% increase at Constant Exchange Rates due to acquisitions of approximately 34%, net of divested clinics, and organic growth of approximately 7%) to $387 million.

       Net dialysis care revenue for the International Segment increased during the three months ended September 30, 2014 by 19% (25% at Constant Exchange Rates) to $699 million from $589 million in the same period of 2013. This increase is a result of contributions from acquisitions (18%), increases in organic revenue per treatment (5%) and same market treatment growth (4%), partially offset by the negative effect of exchange rate fluctuations (6%) and the effect of closed or sold clinics (2%).

       Treatments increased by 10% for the three months ended September 30, 2014 over the same period in 2013 mainly due to contributions from acquisitions (8%) and same market treatment growth (4%), partially offset by the effect of closed or sold clinics (2%). As of September 30, 2014, we treated 108,800 patients (a 12% increase over September 30, 2013) at 1,191 clinics that we own, operate or manage in the International Segment compared to 96,931 patients treated at 1,109 clinics at September 30, 2013. Average revenue per treatment for the three months ended September 30, 2014 increased to $168 from $156 in comparison with the same period of 2013 due to increased reimbursement rates and changes in country mix ($21), partially offset by the weakening of local currencies against the U.S. dollar ($9).

       Dialysis product revenue for the three months ended September 30, 2014 increased by 9% (9% increase at Constant Exchange Rates) to $687 million compared to $633 million in the same period of 2013. The increase was driven by increased sales of dialyzers, bloodlines, and hemodialysis solutions and concentrates as well as products for acute care treatments, partially offset by lower sales of machines.

Operating Income

       Operating income increased to $269 million for the three months ended September 30, 2014 as compared to $214 million for the same period in 2013. Operating income margin increased to 19.4% for the three months ended September 30, 2014 from 17.5% for the same period in 2013 mainly due to a favorable impact from business growth in Asia-Pacific and favorable foreign currency exchange effects.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

Nine months ended September 30, 2014 compared to nine months ended September 30, 2013

Consolidated Financials

Key Indicators for Consolidated Financial Statements  
 
  For the nine months
ended September 30,
  Change in %  
 
  as
reported
  at Constant
Exchange
Rates
(1)
 
 
  2014   2013  

Revenue in $ million

 

 

11,511

 

 

10,743

 

 

7%

 

 

8%

 

Number of treatments

 

 

31,526,484

 

 

30,033,062

 

 

5%

 

 

 

 

Same market treatment growth in %

 

 

3.7%

 

 

3.7%

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

 

31.1%

 

 

32.0%

 

 

 

 

 

 

 

Selling, general and administrative costs as a % of revenue

 

 

16.7%

 

 

16.5%

 

 

 

 

 

 

 

Operating income in $ million

 

 

1,591

 

 

1,595

 

 

(0%

)

 

 

 

Operating income margin in %

 

 

13.8%

 

 

14.8%

 

 

 

 

 

 

 

Net income attributable to shareholders of FMC-AG & Co. KGaA in $ million

 

 

710

 

 

761

 

 

(7%

)

 

 

 

Basic earnings per share in $

 

 

2.35

 

 

2.50

 

 

(6%

)

 

 

 

(1) For further information on Constant Exchange Rates, see "Non-U.S. GAAP Measures for Presentation – Constant Currency" above.

       Net dialysis care revenue increased by 8% to $8,928 million (10% increase at Constant Exchange Rates) for the nine months ended September 30, 2014 from $8,235 million in the same period of 2013, mainly due to contributions from acquisitions (5%), growth in same market treatments (4%) and increases in organic revenue per treatment (1%), partially offset by the negative impact of exchange rate fluctuations (2%). Included in our net dialysis care revenue is Care Coordination revenue in the U.S. of $701 million and $425 million for the nine months ended September 30, 2014 and 2013, respectively.

       Treatments increased by 5% for the nine months ended September 30, 2014 as compared to the same period in 2013. The increase is due to same market treatment growth (4%) and acquisitions (2%), partially offset by the effect of closed or sold clinics (1%).

       Dialysis product revenue increased by 3% (3% increase at Constant Exchange Rates) to $2,583 million as compared to $2,508 million in the same period of 2013. The increase was driven by increased sales of dialyzers, bloodlines, products for acute care treatments, hemodialysis solutions and concentrates and devices manufactured under a five-year contract with a Fresenius SE company, partially offset by lower sales of machines.

       The decrease in gross profit margin to 31.1% from 32.0% reflects a decrease in the North America Segment, partially offset by an increase in the International Segment. The decrease in the North America Segment was mainly due to higher personnel expense, the impact from ATRA reductions on the

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

ESRD PPS payment rate, growth in lower margin in Care Coordination businesses, higher costs as a result of FDA remediation, an unfavorable impact from the U.S. Sequestration, and higher costs for freight and distribution, partially offset by a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors. The increase in the International Segment was due to business growth in Asia-Pacific, a favorable impact from reimbursement rate increases in several countries and a favorable impact from manufacturing driven by lower labor costs and lower start-up costs, partially offset by unfavorable foreign currency exchange effects.

       SG&A expenses increased to $1,921 million in the nine months ended September 30, 2014 from $1,772 million in the same period of 2013. SG&A expenses as a percentage of sales increased to 16.7% for the nine months of 2014 in comparison with 16.5% in the same period of 2013 due to an increase in Corporate and a decrease in the North America Segment. The increase at Corporate was mainly driven by higher legal and consulting expenses, costs related to the changes in the Management Board, costs related to the closing of a manufacturing plant and higher acquisition related costs. The decrease in the North America Segment was due to a favorable impact from commercial payors and a favorable impact from the ESRD PPS market basket update, partially offset by the impact from ATRA reductions on the ESRD PPS payment rate.

       Research and development ("R&D") decreased to $91 million for the nine months ended September 30, 2014 from $95 million for the same period of 2013.

       For the nine months ended September 30, we had a $1 million loss from the sale of FMC-AG & Co. KGaA dialysis clinics as compared to a $9 million gain from the sale of dialysis clinics for the three months ended September 30, 2013.

       Income from equity method investees increased to $22 million for the nine months ended September 30, 2014 from $16 million for the same period of 2013 due to increased income from the VFMCRP renal pharmaceuticals joint venture.

       Operating income decreased to $1,591 million for the nine months ended September 30, 2014 from $1,595 million for the same period in 2013. Operating income margin decreased to 13.8% for the nine months ended September 30, 2014 as compared to 14.8% for the same period in 2013 as a result of a decrease in gross profit margin and higher SG&A as a percentage of revenue, as discussed above.

       Interest expense decreased 1% to $334 million for the nine months ended September 30, 2014 as compared to $336 million for the same period in 2013 due to a higher portion of debt with lower interest rates, partially offset by an increase in the average debt level during the year. Interest income increased to $40 million for the nine months ended September 30, 2014 from $26 million for the same period in 2013 mainly as a result of higher interest income from interest-bearing notes receivables.

       Income tax expense increased to $440 million for the nine months ended September 30, 2014 from $421 million for the same period in 2013. The effective tax rate increased to 33.9% from 32.8% for the same period of 2013. The tax rate for the nine months ended September 30, 2014 was influenced by a tax court decision against another company on a similar transaction for a tax position we took on a prior year's transaction. Based on this decision we reversed our former tax position which resulted in $18 million of additional expense in the second quarter of 2014 period.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

       Net income attributable to noncontrolling interests for the nine months ended September 30, 2014 increased to $147 million from $103 million for the same period of 2013 primarily driven by the creation of new joint ventures in the North America Segment in the second half of 2013.

       Net income attributable to shareholders of FMC-AG & Co. KGaA for the nine months ended September 30, 2014 decreased by 7% to $710 million from $761 million for the same period in 2013 as a result of the combined effects of the items discussed above.

       Basic earnings per share decreased by 6% for the nine months ended September 30, 2014 to $2.35 as compared with $2.50 in 2013 due to the decrease in net income attributable to shareholders of FMC-AG & Co. KGaA above. The average weighted number of shares outstanding for the period was approximately 302.0 million in 2014 (304.7 million in 2013). The decrease in the number of shares outstanding was the result of the share buyback program completed during the third quarter of 2013, partially offset by stock options exercised.

       The following discussions pertain to the North America Segment and the International Segment and the measures we use to manage these segments.


North America Segment

Key Indicators for North America Segment  
 
  For the nine months
ended September 30,
   
 
 
  Change in %  
 
  2014   2013  

Revenue in $ million

 

 

7,624

 

 

7,099

 

 

7%

 

Number of treatments

 

 

19,733,929

 

 

19,041,470

 

 

4%

 

Same market treatment growth in %

 

 

3.4%

 

 

3.6%

 

 

 

 

Operating income in $ million

 

 

1,149

 

 

1,170

 

 

(2%

)

Operating income margin in %

 

 

15.1%

 

 

16.5%

 

 

 

 

Revenue

       Net dialysis care revenue increased for the nine months ended September 30, 2014 by 8% to $7,015 million from $6,485 million in the same period of 2013. This increase was driven by same market treatment growth (3%), contributions from acquisitions (3%) and increases in organic revenue per treatment (2%). Included in our net dialysis care revenue is Care Coordination revenue in the U.S. of $701 million and $425 million for the nine months ended September 30, 2014 and 2013, respectively.

       Treatments increased by 4% for the nine months ended September 30, 2014 as compared to the same period in 2013 mostly due to same market treatment growth (3%) and acquisitions (1%). Average North America Segment revenue per treatment, which includes Canada and Mexico, before bad debt expense, was $358 for the nine months ended September 30, 2014 and $350 in the same period in 2013. In the U.S.,

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

the average revenue per treatment was $366 for the nine months ended September 30, 2014 and $358 for the same period in 2013. The increase in the U.S. was mainly attributable to increased revenue related to pharmacy and laboratory testing services, a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors, partially offset by impact from ATRA reductions on the ESRD PPS payment rate, the impact from the U.S. Sequestration and decreased revenue for renal pharmaceuticals.

       Dialysis product revenue decreased for the nine months ended September 30, 2014 by (1%) to $609 million from $614 million in the same period of 2013. This decrease was driven by lower sales of machines and peritoneal dialysis products, partially offset by higher sales of dialyzers and renal pharmaceuticals.

Operating Income

       Operating income decreased to $1,149 million for the nine months ended September 30, 2014 from $1,170 million for the same period in 2013. Operating income margin decreased to 15.1% for the nine months ended September 30, 2014 from 16.5% for the same period in 2013, due to the impact from ATRA reductions on the ESRD PPS payment rate, higher personnel expense, growth in lower margin Care Coordination businesses, higher costs as a result of FDA remediation, an unfavorable impact from the U.S. Sequestration, and higher costs for freight and distribution, partially offset by a favorable impact from the ESRD PPS market basket update and a favorable impact from commercial payors. Cost per treatment for the North America Segment increased to $297 for the nine months ended September 30, 2014 as compared to $287 for the same period of 2013. Cost per treatment in the U.S. increased to $303 for the nine months ended September 30, 2014 from $293 in the same period of 2013.


International Segment

Key Indicators for International Segment  
 
  For the nine months
ended September 30,
  Change in %  
 
  as
reported
  at Constant
Exchange
Rates
(1)
 
 
  2014   2013  
Revenue in $ million     3,843     3,619     6%     9%  

Number of treatments

 

 

11,792,555

 

 

10,991,592

 

 

7%

 

 

 

 

Same market treatment growth in %

 

 

4.3%

 

 

3.9%

 

 

 

 

 

 

 

Operating income in $ million

 

 

692

 

 

624

 

 

11%

 

 

 

 

Operating income margin in %

 

 

18.0%

 

 

17.2%

 

 

 

 

 

 

 

(1) For further information on Constant Exchange Rates, see "Non-U.S. GAAP Measures for Presentation – Constant Currency" above.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

Revenue

       Including the effects of acquisitions, European region revenue increased 4% (3% increase at Constant Exchange Rates) to $2,306 million, Latin America region revenue decreased 3% (14% increase at Constant Exchange Rates) to $599 million, and Asia-Pacific region revenue increased 19% (21% increase at Constant Exchange Rates due to acquisitions of approximately 15%, net of divested clinics, and organic growth of approximately 6%) to $938 million.

       Net dialysis care revenue for the International Segment increased during the nine months ended September 30, 2014 by 9% (15% at Constant Exchange Rates) to $1,913 million from $1,750 million in the same period of 2013. This increase is a result of contributions from acquisitions (8%), same market treatment growth (4%) and increases in organic revenue per treatment (4%), partially offset by the negative effect of exchange rate fluctuations (6%) and the effect of closed or sold clinics (1%).

       Treatments increased by 7% for the nine months ended September 30, 2014 over the same period in 2013 mainly due to same market treatment growth (4%) and contributions from acquisitions (4%), partially offset by the effect of closed or sold clinics (1%). Average revenue per treatment for the nine months ended September 30, 2014 increased to $162 from $159 in comparison with the same period of 2013 due to increased reimbursement rates and changes in country mix ($12), partially offset by weakening of local currencies against the U.S. dollar ($9).

       Dialysis product revenue for the nine months ended September 30, 2014 increased by 3% (3% increase at Constant Exchange Rates) to $1,930 million compared to $1,869 million in the same period of 2013. The increase at Constant Exchange Rates was driven by increased sales of dialyzers, bloodlines, products for acute care treatments, hemodialysis solutions and concentrates and peritoneal dialysis products, partially offset by decreased sales of machines.

Operating Income

       Operating income increased to $692 million for the nine months ended September 30, 2014 as compared to $624 million for the same period in 2013. Operating income margin increased to 18.0% for the nine months ended September 30, 2014 from 17.2% for the same period in 2013 mainly due to business growth in Asia-Pacific, favorable foreign exchange effects, favorable impact from reimbursement rate increases in several countries and a favorable impact from manufacturing which was driven by lower labor costs and lower start-up costs, partially offset by an accrued provision related to the compliance investigation (see Note 12 of the Notes to the Consolidated Financial Statements (unaudited), "Commitments and Contingencies," included in this report), we are conducting and various other cost increases.


Liquidity and Capital Resources

Nine months ended September 30, 2014 compared to nine months ended September 30, 2013

       Our primary sources of liquidity are typically cash provided by operating activities, cash provided by short-term borrowings from third parties and related parties, as well as proceeds from the issuance of long-term debt and equity securities. We require this capital primarily to finance working capital needs, fund acquisitions and joint ventures, develop free-standing renal dialysis centers, purchase equipment for

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

existing or new renal dialysis centers and production sites, repay debt, pay dividends and repurchase shares (see 'Net Cash Provided By (Used In) Investing Activities" and "Net Cash Provided By (Used In) Financing Activities" below).

       At September 30, 2014, we had cash and cash equivalents of $588 million. For information regarding utilization and availability of cash under our principal credit facility (the "2012 Credit Agreement"), see Note 6 of the Notes to Consolidated Financial Statements (unaudited), "Long-term Debt and Capital Lease Obligations – 2012 Credit Agreement," included in this report.

Net Cash Provided By (Used In) Operating Activities

       In the first nine months of 2014 and 2013, we generated net cash provided by operating activities of $1,274 million and $1,446 million, respectively. Cash provided by operating activities is impacted by the profitability of our business, the development of our working capital, principally inventories, receivables and cash outflows that occur due to a number of specific items as discussed below. The decrease in 2014 versus 2013 was mainly a result of the $115 million payment for the W.R. Grace bankruptcy settlement, a tax payment as a result of a tax audit in Germany for fiscal years 2002 through 2005, which had been previously provided for, of approximately $103 million, increased inventory and a lower decrease of Days Sales Outstanding ("DSO").

       The profitability of our business depends significantly on reimbursement rates. Approximately 78% of our revenues are generated by providing dialysis services, a major portion of which is reimbursed by either public health care organizations or private insurers. For the nine months ended September 30, 2014, approximately 32% of our consolidated revenues were attributable to U.S. federal health care benefit programs, such as Medicare and Medicaid reimbursement. Legislative changes could affect Medicare reimbursement rates for a significant portion of the services we provide, as well as the scope of Medicare coverage. A decrease in reimbursement rates or the scope of coverage could have a material adverse effect on our business, financial condition and results of operations and thus on our capacity to generate cash flow. With the exception of (i) the implementation of the ESRD PPS in the U.S. in January 2011, (ii) the U.S. federal government Sequestration cuts and (iii) the reductions to the ESRD PPS rate to account for the decline in utilization of certain drugs and biologicals associated with dialysis, we have experienced and also expect in the future to experience generally stable reimbursements worldwide for dialysis services. This includes the balancing of unfavorable reimbursement changes in certain countries with favorable changes in other countries.

       Our working capital, which is defined as current assets less current liabilities, was $2,162 million at September 30, 2014 which decreased from $2,733 million at December 31, 2013. The change is primarily the result of the incurrence of Term Loan A-2 under the 2012 Credit Agreement; an increase in short-term borrowings, mainly from related parties; increased accrued expenses and a decrease in cash due to investments made in available-for-sale securities; partially offset by the repayment of the European Investment Bank ("EIB") Agreements in February of 2014; the payment for the W.R. Grace bankruptcy settlement; an increase in our trade accounts receivable as a result of an acquisition and growth in our business; an increase in our finished goods inventories due to pharmaceuticals we ordered and paid for in 2013 arriving in 2014, delayed sales, and growth in our business; an increase in prepaid and other current assets as a result of investments in available for sale securities and a decrease in income taxes payable. Our ratio of current assets to current liabilities was 1.50 and 1.77 at September 30, 2014 and December 31, 2013, respectively.

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

       We intend to continue to address our current cash and financing requirements using cash provided by operating activities, our existing and future credit agreements, and the issuance of debt securities. In addition, when funds are required for acquisitions or to meet other needs, we expect to successfully complete long-term financing arrangements, such as the issuance of senior notes, see "Net Cash Provided By (Used In) Financing Activities" below. We aim to preserve financial resources with a minimum of $300 to $500 million of committed and unutilized credit facilities.

       Cash provided by operating activities depends on the collection of accounts receivable. Commercial customers and governments generally have different payment cycles. A lengthening of their payment cycles could have a material adverse effect on our capacity to generate cash flow. In addition, we could face difficulties in enforcing and collecting accounts receivable under some countries' legal systems and due to the economic conditions in some countries. Accounts receivable balances, net of valuation allowances, represented DSO of 72 at September 30, 2014, a decrease as compared to 73 at December 31, 2013.

       DSO by segment is calculated by dividing the segment's accounts receivable, as converted to U.S. dollars using the average exchange rate for the period presented, less any value added tax included in the receivables, by the average daily sales for the last twelve months of that segment, as converted to U.S. dollars using the average exchange rate for the period. Receivables and sales are adjusted for amounts related to significant acquisitions made during the periods presented. The development of DSO by reporting segment is shown in the table below:

 
  September 30,
2014
  December 31,
2013

North America days sales outstanding

  52   53
         
         

International days sales outstanding

 

108

 

110

         
         

FMC-AG & Co. KGaA average days sales outstanding

 

72

 

73

         
         

       The decrease in North America to a large extent was driven by the positive impact of the resolution of payment delays which were caused by changes in ownership of certain U.S. clinics which resulted from the creation of joint ventures in 2013. The International Segment's DSO decrease reflects an Asia-Pacific acquisition contributing much lower DSO than the average for the region. Due to the fact that a large portion of our reimbursement is provided by public health care organizations and private insurers, we expect that most of our accounts receivable will be collectible, albeit slightly more slowly in the International Segment in the immediate future.

       We are subject to ongoing and future tax audits in the U.S., Germany and other jurisdictions. As a result of a tax audit in the U.S. we identified a tax item relating to civil settlement payment deductions taken by FMCH in prior year tax returns that will or could impact our financial results in the future (see Note 12 of the Notes to the Consolidated Financial Statements (unaudited), "Commitments and Contingencies-Other Litigation and Potential Exposures" for further details on this tax matter). We have also received notices of unfavorable adjustments and disallowances in connection with certain of the audits, including those described above. We are contesting, including appealing, certain of these unfavorable determinations. If our objections and any final audit appeals are unsuccessful, we could be required to make additional tax payments, including payments to state tax authorities reflecting the adjustments made in our federal tax returns in the U.S. With respect to other potential adjustments and disallowances of tax matters currently under review, we do not anticipate that an unfavorable ruling could

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

have a material impact on our results of operations. We are not currently able to determine the timing of these potential additional tax payments.

Net Cash Provided By (Used In) Investing Activities

       We used net cash of $1,684 million and $773 million in investing activities in the nine months ended September 30, 2014 and 2013, respectively.

       Capital expenditures for property, plant and equipment, net of proceeds from sales of property, plant and equipment were $639 million and $494 million in the first nine months of 2014 and 2013, respectively. In the first nine months of 2014, capital expenditures were $296 million in the North America Segment, $196 million at Corporate, $147 million for the International Segment. Capital expenditures in the first nine months of 2013 were $271 million in the North America Segment, $121 million for the International Segment and $102 million at Corporate. The majority of our capital expenditures was used for maintaining existing clinics, equipping new clinics, maintenance and expansion of production facilities, primarily in the North America Segment, Germany, France and Serbia and capitalization of machines provided to our customers, primarily in the International Segment. Capital expenditures were approximately 6% of total revenue in the first nine months of 2014 as compared to 5% for the same period in 2013.

       In addition to the capital expenditures discussed above, we invested approximately $1,049 million cash in the first nine months of 2014, $880 million in the North America Segment, $168 million in the International Segment and $1 million at Corporate. The investment in the North American Segment was mainly driven by the $564 million investment for the majority interest in Sound Inpatient Physicians, Inc., available-for-sale securities, deferred acquisition payments related to an equity method investee, notes receivables related to an equity method investee and other acquisitions. The investment in the International Segment largely relates to acquisitions of clinics and deferred acquisition payments related to an equity method investee. In the first nine months of 2013, we invested approximately $297 million cash, $231 million in the North America Segment, $65 million in the International Segment and $1 million at Corporate.

       We anticipate capital expenditures of approximately $0.9 billion and expect to make acquisitions of approximately $1.3 billion in 2014. See "Outlook" below.

Net Cash Provided By (Used In) Financing Activities

       Net cash provided by financing activities was $308 million in the first nine months of 2014 compared to net cash used in financing activities of $743 million in the first nine months of 2013, respectively.

       In the nine-months period ended September 30, 2014, cash was mainly provided by proceeds from long-term and short-term borrowings including drawing under the revolving credit facility and the issuance of equity-neutral convertible bonds, contributions from noncontrolling interests and proceeds from the exercise of stock options, partially offset by the repayment for the EIB Agreements, repayment of portions of long-term debt and short term borrowings, a reduction in the Accounts Receivable facility, payment of dividends as well as distributions to noncontrolling interests. In the first nine months of 2013, cash was used in the purchase of our shares through the share buyback program, the repayment of portions of long-term debt and short-term borrowings, the payment of dividends and distributions to noncontrolling interests, partially offset by proceeds from long-term debt and short-term borrowings, proceeds from the exercise of stock options and proceeds of a premium paid for the conversion of preference shares into

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

ordinary shares by the largest holder of former preference shares, a financial institution located outside the United States.

       On May 16, 2014, we paid a dividend with respect to 2013 of €.77 per ordinary share (for 2012 paid in 2013 €.75). The total dividend payment was €232 million ($318 million) as compared with €230 million ($296 million) in the prior year.


Non-U.S. GAAP Measures for Presentation

Constant Currency

       Changes in revenue include the impact of changes in foreign currency exchange rates. We use the non-GAAP financial measure at Constant Exchange Rates or Constant Currency in our filings to show changes in our revenue without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, revenues received in local (non-U.S. dollar) currency are translated into U.S. dollars at the average exchange rate for the period presented. Once we translate the local currency revenues for the Constant Currency, we then calculate the change, as a percentage, of the current period revenues using the prior period exchange rates versus the prior period revenues. This resulting percentage is a non-GAAP measure referring to a change as a percentage at Constant Currency.

       We believe that revenue growth is a key indication of how a company is progressing from period to period and that the non-GAAP financial measure Constant Currency is useful to investors, lenders, and other creditors because such information enables them to gauge the impact of currency fluctuations on a company's revenue from period to period. However, we also believe that the usefulness of data on Constant Currency period-over-period changes is subject to limitations, particularly if the currency effects that are eliminated constitute a significant element of our revenue and significantly impact our performance. We therefore limit our use of Constant Currency period-over-period changes to a measure for the impact of currency fluctuations on the translation of local currency revenue into U.S. dollars. We do not evaluate our results and performance without considering both Constant Currency period-over-period changes in non-U.S. GAAP revenue on the one hand and changes in revenue prepared in accordance with U.S. GAAP on the other. We caution the readers of this report to follow a similar approach by considering data on Constant Currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenue prepared in accordance with U.S. GAAP. We present the fluctuation derived from U.S. GAAP revenue next to the fluctuation derived from non-GAAP revenue. Because the reconciliation is inherent in the disclosure, we believe that a separate reconciliation would not provide any additional benefit.


Non-U.S. GAAP Measures

EBITDA

       EBITDA (earnings before interest, tax, depreciation and amortization expenses) was approximately $2,105 million, 18.3% of revenues for the nine-months period ended September 30, 2014, and $2,074 million, 19.3% of revenues for the same period of 2013. EBITDA is the basis for determining compliance with certain covenants contained in our 2012 Credit Agreement, euro-denominated notes and the indentures relating to our senior notes. You should not consider EBITDA to be an alternative to net earnings determined in accordance with U.S. GAAP or to cash flow from operations, investing activities or financing activities. In addition, not all funds depicted by EBITDA are available for management's

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

discretionary use. For example, a substantial portion of such funds are subject to contractual restrictions and functional requirements for debt service, to fund necessary capital expenditures and to meet other commitments from time to time as described in more detail elsewhere in this report. EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to cash flow provided by (used in) operating activities, which we believe to be the most directly comparable U.S. GAAP financial measure, is calculated as follows:

 
  For the nine months
ended September 30,
 
 
  2014   2013  
 
  (in millions)
 

Total EBITDA

  $ 2,105   $ 2,074  

Interest expense (net of interest income)

    (294 )   (310 )

Income tax expense

    (440 )   (421 )

Change in deferred taxes, net

    2     (7 )

Changes in operating assets and liabilities

    (131 )   91  

Stock compensation expense

    4     18  

Other items, net

    28     1  
           

Net cash provided by (used in) operating activities

  $ 1,274   $ 1,446  
           
           

Cash flow measures

       Our consolidated statement of cash flows indicates how we generated and used cash and cash equivalents. When used in conjunction with the other primary financial statements, it provides information that helps us evaluate the changes in our net assets and our financial structure (including our liquidity and solvency). The net cash provided by (used in) operating activities is used to assess whether our business can generate the cash required to make replacement and expansion investments. Net cash provided by (used in) operating activities is impacted by the profitability of our business and development of working capital, principally receivables. The financial key performance indicator of net cash provided by (used in) operating activities in percentage of revenue shows the percentage of our revenue that is available in terms of financial resources.

       Free cash flow is the cash flow provided by (used in) operating activities after capital expenditures for property, plant and equipment but before acquisitions and investments. The key performance indicator used by management is free cash flow in percentage of revenue. This represents the percentage of revenue that is available for acquisitions, dividends to shareholders, or the reduction of debt financing.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013

       The following table shows the significant cash flow key performance indicators for the nine months ended September 30, 2014 and 2013:

 
  For the nine months
ended September 30,
 
 
  2014   2013  
 
  (in millions)
 
Revenue   $ 11,511   $ 10,743  
Net cash provided by (used in) operating activities     1,274     1,446  
Capital expenditures     (646 )   (512 )
Proceeds from sale of property, plant and equipment     7     18  
           
Capital expenditures, net     (639 )   (494 )
           
           
Free cash flow     635     952  
Net cash provided by (used in) operating activities as a % of revenue     11.1%     13.5%  
Free cash flow as a % of revenue     5.5%     8.9%  


Balance Sheet Structure

       Total assets as of September 30, 2014 increased to $24.3 billion from $23.1 billion as compared to December 31, 2013. Current assets as a percent of total assets remained flat at 27% at September 30, 2014 as compared to December 31, 2013. The equity ratio, the ratio of our equity divided by total liabilities and shareholders' equity, decreased to 40% at September 30, 2014 as compared to 41% at December 31, 2013.

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Interim Report of Financial Condition and Results of Operations
for the three and nine months ended September 30, 2014 and 2013


Outlook

       Below is a table showing our growth outlook for 2014:

 
  2014
Revenue   ~ $15.2 billion

Operating income

 

~ $2.2 billion

Operating income margin

 

~ 14,5%

Net income  (1)

 

$1.0 – $1.05 billion

Growth in net income  (1)

 

decrease 5 – 10%

Growth in basic earnings per share  (1)

 

based on development of net income

Capital Expenditures

 

~ $0.9 billion

Acquisitions and investments

 

~ $1.3 billion

Net cash provided by (used in) operating activities

 

> $1.5 billion

Net cash provided by (used in) operating activities as a % of revenue

 

> 10%

Free cash flow as a % of revenue

 

> 4%

Debt/EBITDA Ratio

 

~3.0

Employees  (2)

 

~ 97,000

Research and development expenses

 

~ $140 million

(1) Net income attributable to shareholders of FMC AG & Co. KGaA.

(2) Full-time equivalents.

       The table above excludes revenue of approximately $500 million resulting from acquisitions completed during the nine months ended September 30, 2014.

       The Company initiated a global efficiency program designed to enhance the Company's performance over a multi-year period which should lead to sustainable savings. Potential cost savings before income taxes of up to $60 million generated from this program are not included in the Outlook for 2014.

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Financial Statements

Consolidated Statements of Income

(unaudited)

(in thousands, except share data)

 
  For the three months
ended September 30,
  For the nine months
ended September 30,
 
 
  2014   2013   2014   2013  
Revenue:                          

Dialysis Care

  $ 3,276,629   $ 2,886,742   $ 9,135,597   $ 8,439,921  

Less: Patient service bad debt provision

    79,871     73,590     207,823     205,137  
                   

Net Dialysis Care

    3,196,758     2,813,152     8,927,774     8,234,784  

Dialysis Products

    916,004     852,980     2,583,382     2,507,784  
                   
      4,112,762     3,666,132     11,511,156     10,742,568  

Costs of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dialysis Care

    2,393,333     2,097,751     6,712,355     6,139,317  

Dialysis Products

    431,341     399,252     1,217,163     1,166,231  
                   
      2,824,674     2,497,003     7,929,518     7,305,548  

Gross profit

 

 

1,288,088

 

 

1,169,129

 

 

3,581,638

 

 

3,437,020

 

Operating (income) expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative          

    670,405     584,549     1,920,779     1,771,619  

(Gain) loss on sale of dialysis clinics

    976     (597 )   746     (9,397 )

Research and development

    30,234     33,211     90,963     94,504  

Income from equity method investees

    (3,451 )   (5,294 )   (21,942 )   (14,518 )
                   
Operating income     589,924     557,260     1,591,092     1,594,812  

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

    (11,616 )   (8,740 )   (39,930 )   (25,982 )

Interest expense

    110,719     111,912     333,700     336,434  
                   
Income before income taxes     490,821     454,088     1,297,322     1,284,360  

Income tax expense

 

 

161,719

 

 

148,259

 

 

440,294

 

 

420,873

 
                   
Net income     329,102     305,829     857,028     863,487  

Less: Net income attributable to noncontrolling interests

    58,259     32,855     147,081     102,490  
                   
Net income attributable to shareholders of FMC-AG & Co. KGaA   $ 270,843   $ 272,974   $ 709,947   $ 760,997  
                   
                   
Basic earnings per share   $ 0.89   $ 0.91   $ 2.35   $ 2.50  
                   
                   
Fully diluted earnings per share   $ 0.89   $ 0.90   $ 2.35   $ 2.49  
                   
                   

See accompanying notes to unaudited consolidated financial statements.

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Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands, except share data)

 
  For the three months
ended September 30,
  For the nine months
ended September 30,
 
 
  2014   2013   2014   2013  
Net Income   $ 329,102   $ 305,829   $ 857,028   $ 863,487  
                   

Gain (loss) related to cash flow hedges

    4,574     (531 )   18,604     19,359  

Actuarial gain (loss) on defined benefit pension plans

    4,250     6,324     12,959     19,112  

Gain (loss) related to foreign currency translation

    (197,392 )   30,456     (206,678 )   (96,914 )

Income tax (expense) benefit related to components of other comprehensive income

    (2,582 )   (2,519 )   (9,743 )   (12,436 )
                   
Other comprehensive income (loss), net of tax     (191,150 )   33,730     (184,858 )   (70,879 )
                   
Total comprehensive income   $ 137,952   $ 339,559   $ 672,170   $ 792,608  

Comprehensive income attributable to noncontrolling interests

    54,431     33,619     143,502     100,936  
                   
Comprehensive income attributable to shareholders of FMC-AG & Co. KGaA   $ 83,521   $ 305,940   $ 528,668   $ 691,672  
                   
                   

See accompanying notes to unaudited consolidated financial statements.

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Consolidated Balance Sheets

At September 30, 2014 and December 31, 2013

(in thousands, except share data)

 
  September 30,
2014
  December 31,
2013
 
 
  (unaudited)
  (audited)
 
Assets              
Current assets:              

Cash and cash equivalents

  $ 587,504   $ 682,777  

Trade accounts receivable less allowance for doubtful accounts of $410,714 in 2014 and $413,165 in 2013

    3,153,236     3,037,274  

Accounts receivable from related parties

    179,826     153,118  

Inventories

    1,185,204     1,097,104  

Prepaid expenses and other current assets

    1,107,857     1,037,391  

Deferred taxes

    245,110     279,052  
           

Total current assets

    6,458,737     6,286,716  

Property, plant and equipment, net

 

 

3,253,238

 

 

3,091,954

 
Intangible assets     770,274     757,876  
Goodwill     12,361,197     11,658,187  
Deferred taxes     106,163     104,167  
Investment in equity method investees     679,509     664,446  
Other assets and notes receivables     623,458     556,560  
           

Total assets

  $ 24,252,576   $ 23,119,906  
           
           
Liabilities and shareholders' equity              
Current liabilities:              

Accounts payable

  $ 538,328   $ 542,597  

Accounts payable to related parties

    146,691     123,929  

Accrued expenses and other current liabilities

    2,137,067     2,012,533  

Short-term borrowings and other financial liabilities

    139,997     96,648  

Short-term borrowings from related parties

    291,422     62,342  

Current portion of long-term debt and capital lease obligations

    924,166     511,370  

Income tax payable

    85,358     170,360  

Deferred taxes

    33,446     34,194  
           

Total current liabilities

    4,296,475     3,553,973  

Long-term debt and capital lease obligations, less current portion

 

 

7,712,788

 

 

7,746,920

 
Other liabilities     392,599     329,561  
Pension liabilities     402,881     435,858  
Income tax payable     175,512     176,933  
Deferred taxes     748,468     743,390  
           

Total liabilities

    13,728,723     12,986,635  

Noncontrolling interests subject to put provisions

 

 

773,733

 

 

648,251

 

Shareholders' equity:

 

 

 

 

 

 

 
Ordinary shares, no par value, €1.00 nominal value, 392,462,972 shares authorized, 310,709,848 issued and 303,160,897 outstanding     384,722     382,411  
Treasury stock, at cost     (505,014 )   (505,014 )
Additional paid-in capital     3,570,182     3,530,337  
Retained earnings     6,769,461     6,377,417  
Accumulated other comprehensive (loss) income     (731,866 )   (550,587 )
           

Total FMC-AG & Co. KGaA shareholders' equity

    9,487,485     9,234,564  
Noncontrolling interests not subject to put provisions     262,635     250,456  

Total equity

    9,750,120     9,485,020  
           

Total liabilities and equity

  $ 24,252,576   $ 23,119,906  
           
           

See accompanying notes to unaudited consolidated financial statements.

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Consolidated Statements of Cash Flows

For the nine months ended September 30, 2014 and 2013

(unaudited, in thousands)

 
  For the nine months
ended September 30,
 
 
  2014   2013  

Operating Activities:

             

Net income

  $ 857,028   $ 863,487  

Adjustments to reconcile net income to net cash provided by operating activities:

             

Depreciation and amortization

    513,487     479,433  

Change in deferred taxes, net

    1,657     (6,771 )

(Gain) loss on sale of investments

    746     (9,397 )

(Gain) loss on sale of fixed assets

    2,527     2,995  

Compensation expense related to stock options

    3,804     18,484  

Cash inflow (outflow) from hedging

    -     (4,040 )

Investments in equity method investees, net

    25,193     10,790  

Changes in assets and liabilities, net of amounts from businesses acquired:

             

Trade accounts receivable, net

    (102,147 )   (15,470 )

Inventories

    (132,705 )   (20,109 )

Prepaid expenses, other current and non-current assets

    117,957     47,731  

Accounts receivable from related parties

    (98,944 )   (2,232 )

Accounts payable to related parties

    117,115     (13,933 )

Accounts payable, accrued expenses and other current and non-current liabilities

    51,646     78,743  

Income tax payable

    (83,544 )   16,309  
           

Net cash provided by (used in) operating activities

    1,273,820     1,446,020  
           

Investing Activities:

             

Purchases of property, plant and equipment

    (646,371 )   (512,476 )

Proceeds from sale of property, plant and equipment

    7,632     18,583  

Acquisitions and investments, net of cash acquired, and purchases of intangible assets

    (1,048,711 )   (297,456 )

Proceeds from divestitures

    3,661     17,984  
           

Net cash provided by (used in) investing activities

    (1,683,789 )   (773,365 )
           

Financing Activities:

             

Proceeds from short-term borrowings

    170,479     78,316  

Repayments of short-term borrowings

    (141,361 )   (78,555 )

Proceeds from short-term borrowings from related parties

    309,730     16,464  

Repayments of short-term borrowings from related parties

    (56,762 )   (5,836 )

Proceeds from long-term debt and capital lease obligations (net of debt issuance costs of $44,690 in 2014)

    1,616,470     337,137  

Repayments of long-term debt and capital lease obligations

    (1,118,729 )   (325,912 )

Increase (decrease) of accounts receivable securitization program

    (94,000 )   37,000  

Proceeds from exercise of stock options

    86,403     74,875  

Proceeds from conversion of preference shares into ordinary shares

    -     34,784  

Purchase of treasury stock

    -     (505,014 )

Dividends paid

    (317,903 )   (296,134 )

Distributions to noncontrolling interests

    (177,810 )   (162,239 )

Contributions from noncontrolling interests

    31,497     52,357  
           

Net cash provided by (used in) financing activities

    308,014     (742,757 )
           

Effect of exchange rate changes on cash and cash equivalents

    6,682     (15,783 )
           

Cash and Cash Equivalents:

             

Net increase (decrease) in cash and cash equivalents

    (95,273 )   (85,885 )

Cash and cash equivalents at beginning of period

    682,777     688,040  
           

Cash and cash equivalents at end of period

  $ 587,504   $ 602,155  
           
           

   

See accompanying notes to unaudited consolidated financial statements.

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Consolidated Statement of Shareholders' Equity
For the nine months ended September 30, 2014 (unaudited) and
year ended December 31, 2013 (audited)
(in thousands, except share data)

 
  Preference Shares   Ordinary Shares   Treasury Stock    
   
   
  Total
FMC-AG & Co.
KGaA
shareholders'
equity
   
   
 
 
   
   
  Accumulated
Other
comprehensive
income (loss)
  Noncontrolling
interests not
subject to put
provisions
   
 
 
  Number of
shares
  No par
value
  Number of
shares
  No par
value
  Number of
shares
  Amount   Additional
paid in
capital
  Retained
earnings
  Total Equity  
Balance at December 31, 2012     3,973,333   $ 4,462     302,739,758   $ 374,915     -   $ -   $ 3,491,581   $ 5,563,661   $ (492,113 ) $ 8,942,506   $ 264,754   $ 9,207,260  
Proceeds from exercise of options and related tax effects     2,200     3     2,280,439     3,031     -     -     102,520     -     -     105,554     -     105,554  
Proceeds from conversion of preference shares into ordinary shares     (3,975,533 )   (4,465 )   3,975,533     4,465     -     -     34,784     -     -     34,784     -     34,784  
Compensation expense related to stock options     -     -     -     -     -     -     13,593     -     -     13,593     -     13,593  
Purchase of treasury stock     -     -     -     -     (7,548,951 )   (505,014 )   -     -     -     (505,014 )   -     (505,014 )
Dividends paid     -     -     -     -     -     -     -     (296,134 )   -     (296,134 )   -     (296,134 )
Purchase/ sale of noncontrolling interests     -     -     -     -     -     -     (3,566 )   -     -     (3,566 )   (11,607 )   (15,173 )
Contributions from/ to noncontrolling interests     -     -     -     -     -     -     -     -     -     -     (32,275 )   (32,275 )
Changes in fair value of noncontrolling interests subject to put provisions     -     -     -     -     -     -     (108,575 )   -     -     (108,575 )   -     (108,575 )

Net income

    -     -     -     -     -     -     -     1,109,890     -     1,109,890     32,577     1,142,467  

Other comprehensive income (loss)

    -     -     -     -     -     -     -     -     (58,474 )   (58,474 )   (2,993 )   (61,467 )
                                                                   
Comprehensive income     -     -     -     -     -     -     -     -     -     1,051,416     29,584     1,081,000  
                                                   
Balance at December 31, 2013     -   $ -     308,995,730   $ 382,411     (7,548,951 ) $ (505,014 ) $ 3,530,337   $ 6,377,417   $ (550,587 ) $ 9,234,564   $ 250,456   $ 9,485,020  
                                                   
                                                   
Proceeds from exercise of options and related tax effects     -     -     1,714,118     2,311     -     -     80,564     -     -     82,875     -     82,875  
Compensation expense related to stock options     -     -     -     -     -     -     3,804     -     -     3,804     -     3,804  
Dividends paid     -     -     -     -     -     -     -     (317,903 )   -     (317,903 )   -     (317,903 )
Purchase/ sale of noncontrolling interests     -     -     -     -     -     -     (4,870 )   -     -     (4,870 )   9,422     4,552  
Contributions from/ to noncontrolling interests     -     -     -     -     -     -     -     -     -     -     (46,216 )   (46,216 )
Changes in fair value of noncontrolling interests subject to put provisions     -     -     -     -     -     -     (39,653 )   -     -     (39,653 )   -     (39,653 )

Net income

    -     -     -     -     -     -     -     709,947     -     709,947     50,110     760,057  

Other comprehensive income (loss)

    -     -     -     -     -     -     -     -     (181,279 )   (181,279 )   (1,137 )   (182,416 )
                                                                   
Comprehensive income     -     -     -     -     -     -     -     -     -     528,668     48,973     577,641  
                                                   
Balance at September 30, 2014     -   $ -     310,709,848   $ 384,722     (7,548,951 ) $ (505,014 ) $ 3,570,182   $ 6,769,461   $ (731,866 ) $ 9,487,485   $ 262,635   $ 9,750,120  
                                                   
                                                   

   

See accompanying notes to unaudited consolidated financial statements.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

1.    The Company and Basis of Presentation

The Company

       Fresenius Medical Care AG & Co. KGaA ("FMC-AG & Co. KGaA" or the "Company"), a German partnership limited by shares (Kommanditgesellschaft auf Aktien), is the world's largest kidney dialysis company, operating in both the field of dialysis care and the field of dialysis products for the treatment of end-stage renal disease ("ESRD"). The Company's dialysis care business, in addition to providing dialysis treatments to patients with ESRD, includes pharmacy services, vascular access surgery services, laboratory testing services, physician services, hospitalist services, health plan services and urgent care services (together, "Care Coordination"). The Company's dialysis products business includes manufacturing and distributing products for the treatment of ESRD. The Company's dialysis business is vertically integrated, providing dialysis treatment at dialysis clinics it owns or operates and supplying these clinics with a broad range of products. In addition, the Company sells dialysis products to other dialysis service providers. In the United States ("U.S."), the Company also provides inpatient dialysis services as well as other services under contract to hospitals.

       In these unaudited consolidated financial statements, "FMC-AG & Co. KGaA," or the "Company," "we," "us" or "our" refers to the Company or the Company and its subsidiaries on a consolidated basis, as the context requires. The term "North America Segment" refers to the Company's North America operating segment and the term "International Segment" refers to the combination of the Europe, Middle East, Africa, and Latin America ("EMEALA") operating segment and the Asia-Pacific operating segment. For further discussion of our operating segments, see Note 15 "Segment and Corporate Information."

Basis of Presentation

       The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

       The consolidated financial statements at September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 contained in this report are unaudited and should be read in conjunction with the consolidated financial statements contained in the Company's 2013 Annual Report on Form 20-F. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Such financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are of a normal recurring nature.

       The accounting policies applied in the accompanying consolidated financial statements are the same as those applied in the consolidated financial statements at and for the year ended December 31, 2013, contained in the Company's 2013 Annual Report on Form 20-F.

       Certain items, in the net aggregate amount of $7,003 and $18,373 for the three- and nine-months periods ending September 30, 2013, respectively, relating to research and development, compensation

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

expense, and income from equity method investees have been reclassified in the prior year's comparative consolidated financial statements between the North America Segment, the International Segment and Corporate, as applicable, to conform to the current year's presentation.

       The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results of operations for the year ending December 31, 2014.

2.    Acquisitions

       As of September 30, 2014, we made acquisitions of $978,161. Included within this amount is $589,665 in cash and non-cash consideration paid for the acquisition of Sound Inpatient Physicians, Inc., a physician services organization focused on hospitalist and post-acute care services which was announced on June 27, 2014.

3.    Related Party Transactions

       The Company's parent, Fresenius SE & Co. KGaA ("Fresenius SE"), a German partnership limited by shares, owns 100% of the share capital of Fresenius Medical Care Management AG, the Company's general partner ("General Partner"). Fresenius SE is also the Company's largest shareholder and owns approximately 31.1% of the Company's outstanding shares at September 30, 2014. The Company has entered into certain arrangements for services, leases and products with Fresenius SE or its subsidiaries and with certain of the Company's equity method investees as described in item a) below. The Company's terms related to the receivables or payables for these services, leases and products are generally consistent with the normal terms of the Company's ordinary course of business transactions with unrelated parties. Financing arrangements as described in item b) below have agreed upon terms which are determined at the time such financing transactions occur and reflect market rates at the time of the transaction. The relationship between the Company and its related parties that assume the role of key management personnel is described in item c) below. Our related party transactions are settled through Fresenius SE's cash management system where appropriate.

a)   Service Agreements, Lease Agreements and Products

       The Company is party to service agreements with Fresenius SE and certain of its affiliates (collectively the "Fresenius SE Companies") to receive services, including, but not limited to: administrative services, management information services, employee benefit administration, insurance, information technology services, tax services and treasury management services. The Company also provides certain services to the Fresenius SE Companies, including research and development, central purchasing and warehousing. The Company also performs clinical studies and marketing and distribution services for certain of its equity method investees.

       The Company entered into real estate operating lease agreements with the Fresenius SE Companies, which include leases for the corporate headquarters in Bad Homburg, Germany and production sites in Schweinfurt and St. Wendel, Germany. The majority of the leases expire in 2016 and contain renewal options.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       In addition to the above mentioned service and lease agreements, the Company sold products to the Fresenius SE Companies and made purchases from the Fresenius SE Companies. In addition, Fresenius Medical Care Holdings, Inc. ("FMCH") purchases heparin supplied by Fresenius Kabi USA, Inc. ("Kabi USA"), through an independent group purchasing organization ("GPO"). Kabi USA is wholly-owned by Fresenius Kabi AG, a wholly-owned subsidiary of Fresenius SE. The Company has no direct supply agreement with Kabi USA and does not submit purchase orders directly to Kabi USA. FMCH acquires heparin from Kabi USA, through the GPO contract, which was negotiated by the GPO at arm's length on behalf of all members of the GPO.

       The Company entered into an agreement with a Fresenius SE company for the manufacturing of plasma collection devices. The Company agreed to produce 3,500 units, with an option to produce a total of 4,550 units, over the length of the five year contract.

       Below is a summary, including the Company's receivables from and payables to the indicated parties resulting from the above described transactions with related parties.

Service Agreements, Lease Agreements and Products  
 
  For the nine months ended
September 30, 2014
  For the nine months ended
September 30, 2013
  September 30, 2014   December 31, 2013  
 
  Sales of
goods and
services
  Purchases
of goods
and services
  Sales of
goods and
services
  Purchases
of goods
and services
  Accounts
Receivables
  Accounts
Payables
  Accounts
Receivables
  Accounts
Payables
 

Service Agreements

                                                 

Fresenius SE

    238     17,059     241     16,265     23     2,642     245     2,365  

Fresenius SE affiliates

    6,249     49,384     4,684     61,950     1,051     2,437     975     1,900  

Equity method investees

    14,082     -     15,833     -     2,227     -     20,336     -  
                                   

Total

  $ 20,569   $ 66,443   $ 20,758   $ 78,215   $ 3,301   $ 5,079   $ 21,556   $ 4,265  
                                   
                                   

Lease Agreements

                                                 

Fresenius SE

    -     7,907     -     7,331     -     -     -     -  

Fresenius SE affiliates

    -     13,281     -     12,706     -     -     -     -  
                                   

Total

  $ -   $ 21,188   $ -   $ 20,037   $ -   $ -   $ -   $ -  
                                   
                                   

Products

                                                 

Fresenius SE

    -     -     17     -     -     -     -     -  

Fresenius SE affiliates

    42,822     33,644     22,634     42,274     18,566     3,859     18,587     7,231  
                                   

Total

  $ 42,822   $ 33,644   $ 22,651   $ 42,274   $ 18,566   $ 3,859   $ 18,587   $ 7,231  
                                   
                                   

b)   Financing

       The Company receives short-term financing from and provides short-term financing to Fresenius SE. The Company also utilizes Fresenius SE's cash management system for the settlement of certain intercompany receivables and payables with its subsidiaries and other related parties. As of September 30, 2014 and December 31, 2013, the Company had accounts receivables from Fresenius SE related to short-term financing in the amount of $135,010 and $112,568, respectively. As of September 30, 2014 and December 31, 2013, the Company had accounts payables to Fresenius SE related to short-term financing in the amount of $119,455 and $102,731, respectively. The interest rates for these cash management arrangements are set on a daily basis and are based on the then-prevailing overnight reference rate for the respective currencies.

       On June 12, 2014, the Company provided a one-year unsecured term loan to one of its equity method investees in the amount of $22,500 with an interest rate of 2.5366%. The loan agreement contains automatic one year renewals and requires a six-month termination notice.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       At September 30, 2014, the Company borrowed from Fresenius SE €228,600 ($287,648 at September 30, 2014) on an unsecured basis at an interest rate of 1.382%. Subsequent to September 30, 2014, the Company received additional advances from Fresenius SE increasing the amount borrowed to €260,600 ($327,913) and is due on October 31, 2014. For further information on this loan agreement, see Note 5. "Short-Term Borrowings, Other Financial Liabilities and Short-Term Borrowings from Related Parties – Short-Term Borrowings from Related Parties."

       On August 19, 2009, the Company borrowed €1,500 ($1,887 at September 30, 2014) from the General Partner on an unsecured basis at 1.335%. The loan repayment has been extended periodically and is currently due August 20, 2015 with an interest rate of 1.849%. On November 28, 2013, the Company borrowed an additional €1,500 ($1,887 at September 30, 2014) from the General Partner at 1.875%. This loan is due on November 28, 2014.

       At September 30, 2014 and December 31, 2013, a subsidiary of Fresenius SE held unsecured Senior Notes issued by the Company in the amount of €11,800 and €11,800 ($14,848 at September 30, 2014 and $16,273 at December 31, 2013), respectively. The Senior Notes were issued in 2011 and 2012, mature in 2021 and 2019, respectively, and have a coupon rate of 5.25% with interest payable semiannually.

       On May 23, 2014, the maturity date, the Company repaid a Chinese Yuan Renminbi ("CNY") loan, with interest, of 360,794 ($57,854) to a subsidiary of Fresenius SE.

c)    Key Management Personnel

       Due to the legal form of a German partnership limited by shares, the General Partner holds a key management position within the Company. In addition members of the Management Board and the Supervisory Board as key management personnel, as well as their close relatives, are considered related parties.

       The Company's Articles of Association provide that the General Partner shall be reimbursed for any and all expenses in connection with management of the Company's business, including remuneration of the members of the General Partner's supervisory board and the members of the General Partner's management board. The aggregate amount reimbursed to the General Partner was $17,307 and $12,219, respectively, for its management services during the nine months ended September 30, 2014 and 2013. As of September 30, 2014 and December 31, 2013, the Company had accounts receivable from the General Partner in the amount of $449 and $407, respectively. As of September 30, 2014 and December 31, 2013, the Company had accounts payable to the General Partner in the amount of $18,298 and $9,702, respectively.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

4.    Inventories

       At September 30, 2014 and December 31, 2013, inventories consisted of the following:

 
  September 30,
2014
  December 31,
2013
 

Finished goods

  $ 745,631   $ 640,355  

Raw materials and purchased components

    197,199     185,146  

Health care supplies

    167,562     195,519  

Work in process

    74,812     76,084  
           

Inventories

  $ 1,185,204   $ 1,097,104  
           
           

5.    Short-Term Borrowings, Other Financial Liabilities and Short-Term Borrowings from Related Parties

       At September 30, 2014 and December 31, 2013, short-term borrowings, other financial liabilities and short-term borrowings from related parties consisted of the following:

 
  September 30,
2014
  December 31,
2013
 

Borrowings under lines of credit

  $ 139,766   $ 95,690  

Other financial liabilities

    231     958  
           

Short-term borrowings and other financial liabilities

    139,997     96,648  

Short-term borrowings from related parties (see Note 3.b)

    291,422     62,342  
           

Short-term borrowings, other financial liabilities and short-term borrowings from related parties

  $ 431,419   $ 158,990  
           
           

Short-term Borrowings from related parties

       The Company is party to an unsecured loan agreement with Fresenius SE under which the Company or its subsidiaries may request and receive one or more short-term advances up to an aggregate amount of $400,000 until maturity on October 30, 2017. The interest on the advance(s) will be at a fluctuating rate per annum equal to LIBOR or EURIBOR as applicable plus applicable margin. Advances can be repaid and reborrowed. On September 30, 2014, the Company received an advance of €228,600 at an interest rate of 1.3820%. For further information on short-term borrowings from related party outstanding at September 30, 2014, see Note 3 b.

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

6.    Long-Term Debt and Capital Lease Obligations

       At September 30, 2014 and December 31, 2013, long-term debt and capital lease obligations consisted of the following:

 
  September 30,
2014
  December 31,
2013
 

2012 Credit Agreement

  $ 2,977,968   $ 2,707,145  

Senior Notes

    4,671,262     4,824,753  

Equity-neutral convertible bonds

    466,363     -  

Euro Notes (1)

    35,390     46,545  

European Investment Bank Agreements (2)

    -     193,074  

Accounts receivable facility

    257,250     351,250  

Capital lease obligations

    44,509     24,264  

Other

  $ 184,212   $ 111,259  
           

Long-term debt and capital lease obligations

    8,636,954     8,258,290  

Less current maturities

    (924,166 )   (511,370 )
           

Long-term debt and capital lease obligations, less current portion

  $ 7,712,788   $ 7,746,920  
           
           

(1) The Euro Notes were fully paid on October 27, 2014.

(2) The remaining two loans under the European Investment Bank Agreements were repaid on their maturity in February 2014.

2012 Credit Agreement

       The following table shows the available and outstanding amounts under the 2012 Credit Agreement at September 30, 2014 and at December 31, 2013:

 
  Maximum Amount Available
September 30, 2014
  Balance Outstanding
September 30, 2014
 
Revolving Credit USD   $ 600,000   $ 600,000   $ 27,968   $ 27,968  
Revolving Credit EUR   500,000   $ 629,150   -   $ -  
Term Loan A   $ 2,350,000   $ 2,350,000   $ 2,350,000   $ 2,350,000  
Term Loan A-2   $ 600,000   $ 600,000   $ 600,000   $ 600,000  
                       
          $ 4,179,150         $ 2,977,968  
                       
                       

 

 
  Maximum Amount Available
December 31, 2013
  Balance Outstanding
December 31, 2013
 
Revolving Credit USD   $ 600,000   $ 600,000   $ 138,190   $ 138,190  
Revolving Credit EUR   500,000   $ 689,550   50,000   $ 68,955  
Term Loan A   $ 2,500,000   $ 2,500,000   $ 2,500,000   $ 2,500,000  
                       
          $ 3,789,550         $ 2,707,145  
                       
                       

       At September 30, 2014 and December 31, 2013, the Company had letters of credit outstanding in the amount of $6,893 and $9,444, respectively, under the revolving credit facility, which are not included above as part of the balance outstanding, but reduce the available borrowings under the revolving credit facility.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

Term Loan A-2

       On July 1, 2014, the Company increased the 2012 Credit Agreement by establishing an incremental term loan tranche of $600,000 ("Term Loan A-2") to finance an investment in the U.S. into Sound Inpatient Physicians, Inc., which closed in July of 2014, and for general corporate purposes. Term Loan A-2 has a one year maturity and must be mandatorily prepaid with 100% of the net cash proceeds of US$ – denominated bonds or syndicated term loans, to the extent that these proceeds exceed a certain threshold. In line with these provisions, Term Loan A-2 was prepaid on October 29, 2014 from the proceeds of the offering of Senior Notes (for further information on the Senior Notes, see Note 17). The interest rate under the Term Loan A-2 was a rate equal to either (i) Libor plus an applicable margin or (ii) the Base Rate as defined in the 2012 Credit Agreement plus an applicable margin. The applicable margin increased after 90 days and would have further increased 180 days following disbursement.

Accounts Receivable Facility

       The following table shows the available and outstanding amounts under the account receivable facility at September 30, 2014 and at December 31, 2013:

 
  Maximum Amount
Available (1)
  Balance Outstanding  
 
  September 30,
2014
  December 31,
2013
  September 30,
2014
  December 31,
2013
 
Accounts Receivable Facility   $ 800,000   $ 800,000   $ 257,250   $ 351,250  
                   
                   

(1) Subject to availability of sufficient accounts receivable meeting funding criteria.

       The Company also had letters of credit outstanding under the accounts receivable facility in the amount of $66,622 as of September 30, 2014 and $65,622 at December 31, 2013. These letters of credit are not included above as part of the balance outstanding at September 30, 2014 and December 31, 2013; however, they reduce available borrowings under the accounts receivable facility.

Equity-neutral Convertible Bonds

       On September 19, 2014, the Company issued €400,000 ($514,080) equity-neutral convertible bonds ("Convertible Bonds") which have a coupon of 1.125% and are due on January 31, 2020. The bonds were issued at par with the initial conversion price based upon the predetermined share price of €73.6448. Beginning November 2017, bond holders can exercise the conversion rights embedded in the bonds at certain dates. In order to offset, in full, the economic exposure from the conversion feature, the Company purchased call options on its shares ("Share Options"). Any increase of the Company's share price above the conversion price would be offset by a corresponding value increase of the Share Options. The Company will amortize the cost of these options, €29,600, ($38,042), and various other offering costs over the life of the bonds, effectively increasing the total interest rate to 2.611%. We used the net proceeds of $471,203 for general corporate purposes. The Convertible Bonds are jointly and severally guaranteed by FMCH and Fresenius Medical Care Deutschland GmbH ("D-GmbH").

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

7.    Stock Options

       On July 28, 2014 under the Long Term Incentive Program 2011, the Company awarded 1,595,520 stock options, including 273,900 stock options granted to members of the Management Board of Fresenius Medical Care Management AG ("Management Board"), the Company's general partner, at an exercise price of $67.07 (€49.93), a fair value of $12.10 each and a total fair value of $19,306 which will be amortized over the four-year vesting period. The Company also awarded 283,716 shares of phantom stock, including 24,950 shares of phantom stock granted to members of the Management Board at a measurement date fair value of $65.08 (€51.72) each and a total fair value of $18,464, which will be revalued if the fair value changes, and amortized over the four-year vesting period.

8.    Earnings Per Share

       The following table contains reconciliations of the numerators and denominators of the basic and diluted earnings per share computations for the three and nine months ended September 30, 2014 and 2013:

 
  For the three months
ended September 30,
  For the nine months
ended September 30,
 
 
  2014   2013   2014   2013  
Numerators:                          
Net income attributable to shareholders of FMC-AG & Co. KGaA   $ 270,843   $ 272,974   $ 709,947   $ 760,997  

Denominators:

 

 

 

 

 

 

 

 

 

 

 

 

 
Weighted average number of:                          
Ordinary shares outstanding     302,711,512     301,310,149     301,999,288     302,158,886  
Preference shares outstanding (1)     -     -     -     2,590,857  
                   
Total weighted average shares outstanding     302,711,512     301,310,149     301,999,288     304,749,743  
Potentially dilutive Ordinary shares     571,521     445,648     416,688     637,188  
                   
Total weighted average Ordinary shares outstanding assuming dilution     303,283,033     301,755,797     302,415,976     302,796,074  

Basic earnings per share

 

$

0.89

 

$

0.91

 

$

2.35

 

$

2.50

 
Fully diluted earnings per share     0.89     0.90     2.35     2.49  

(1) As of the preference share conversion on June 28, 2013, the Company no longer has two classes of shares outstanding.

9.    Employee Benefit Plans

       The Company currently has two principal pension plans, one for German employees, the other covering employees in the United States, the latter of which was curtailed in 2002. Plan benefits are generally based on years of service and final salary. As there is no legal requirement in Germany to fund defined benefit plans, the Company's pension obligations in Germany are unfunded. Each year FMCH contributes to the plan covering United States employees at least the minimum required by the Employee Retirement Income Security Act of 1974, as amended.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       The following table provides the calculations of net periodic benefit cost for the three and nine months ended September 30, 2014 and 2013, respectively.

 
  For the three months
ended September 30,
  For the nine months
ended September 30,
 
 
  2014   2013   2014   2013  
Components of net periodic benefit cost:                          
Service cost   $ 4,671   $ 3,993   $ 14,153   $ 11,785  
Interest cost     7,422     6,658     22,234     20,200  
Expected return on plan assets     (4,160 )   (3,415 )   (12,010 )   (10,215 )
Amortization of unrealized losses     4,250     6,324     12,959     19,112  
                   
Net periodic benefit costs   $ 12,183   $ 13,560   $ 37,336   $ 40,882  
                   
                   

10.    Noncontrolling Interests Subject to Put Provisions

       The Company has potential obligations to purchase the noncontrolling interests held by third parties in certain of its consolidated subsidiaries. These obligations are in the form of put provisions and are exercisable at the third-party owners' discretion within specified periods as outlined in each specific put provision. If these put provisions were exercised, the Company would be required to purchase all or part of third-party owners' noncontrolling interests at the appraised fair value at the time of exercise. The methodology the Company uses to estimate the fair values of the noncontrolling interest subject to put provisions assumes the greater of net book value or a multiple of earnings, based on historical earnings, development stage of the underlying business and other factors. The estimated fair values of the noncontrolling interests subject to these put provisions can also fluctuate and the implicit multiple of earnings at which these noncontrolling interest obligations may ultimately be settled could vary significantly from our current estimates depending upon market conditions.

       At September 30, 2014 and December 31, 2013, the Company's potential obligations under these put options were $773,733 and $648,251, respectively, of which, at September 30, 2014, put options with an aggregate purchase obligation of $117,163 were exercisable. Two put options were exercised for a total consideration of $2,543 during the first nine months of 2014.

       The following is a roll forward of noncontrolling interests subject to put provisions for the nine months ended September 30, 2014 and the year ended December 31, 2013:

 
  September 30,
2014
  December 31,
2013
 
Beginning balance as of January 1,   $ 648,251   $ 523,260  
Contributions to noncontrolling interests     (104,876 )   (122,179 )
Purchase/ sale of noncontrolling interests     82,463     6,723  
Contributions from noncontrolling interests     13,713     17,767  
Changes in fair value of noncontrolling interests     39,653     108,575  
Net income     96,971     113,156  
Other comprehensive income (loss)     (2,442 )   949  
           
Ending balance as of September 30, 2014 and December 31, 2013   $ 773,733   $ 648,251  
           
           

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

11.    Sources of Revenue

       Below is a table showing the sources of our U.S. patient service revenue (net of contractual allowance and discounts but before patient service bad debt provision), included in the Company's dialysis care revenue, for the nine months ended September 30, 2014 and 2013. Outside of the U.S., the Company does not recognize patient service revenue at the time the services are rendered without assessing the patient's ability to pay. Accordingly, the additional disclosure requirements introduced with ASU 2011-07 only apply to the U.S. patient service revenue.

 
  For the nine months
ended September 30,
 
 
  2014   2013  
Medicare program   $ 3,422,033   $ 3,258,043  
Private/alternative payors     3,100,575     2,833,762  
Medicaid and other government sources     320,728     288,878  
Hospitals     379,695     309,164  
           
Total patient service revenue   $ 7,223,031   $ 6,689,847  
           
           

12.    Commitments and Contingencies

Legal and Regulatory Matters

       The Company is routinely involved in numerous claims, lawsuits, regulatory and tax audits, investigations and other legal matters arising, for the most part, in the ordinary course of its business of providing healthcare services and products. Legal matters that the Company currently deems to be material or noteworthy are described below. For the matters described below in which the Company believes a loss is both reasonably possible and estimable, an estimate of the loss or range of loss exposure is provided. For the other matters described below, the Company believes that the loss probability is remote and/or the loss or range of possible losses cannot be reasonably estimated at this time. The outcome of litigation and other legal matters is always difficult to predict accurately and outcomes that are not consistent with the Company's view of the merits can occur. The Company believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously. Nevertheless, it is possible that the resolution of one or more of the legal matters currently pending or threatened could have a material adverse effect on its business, results of operations and financial condition.

Commercial Litigation

       On August 27, 2012, Baxter filed suit in the U.S. District Court for the Northern District of Illinois, styled Baxter International Inc., et al., v. Fresenius Medical Care Holdings, Inc., Case No. 12-cv-06890, alleging that the Company's Liberty® cycler infringes certain U.S. patents that were issued to Baxter between October 2010 and June 2012. The Company believes it has valid defenses to these claims, and will defend this litigation vigorously.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       On April 5, 2013, the U.S. Judicial Panel on Multidistrict Litigation ordered that the numerous lawsuits filed and anticipated to be filed in various federal courts alleging wrongful death and personal injury claims against FMCH and certain of its affiliates relating to FMCH's acid concentrate products NaturaLyte® and Granuflo® be transferred and consolidated for pretrial management purposes into a consolidated multidistrict litigation in the United States District Court for the District of Massachusetts, styled In Re: Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, Case No. 2013-md-02428. The Massachusetts state courts subsequently established a similar consolidated litigation for such cases filed in Massachusetts county courts, styled In Re: Consolidated Fresenius Cases, Case No. MICV 2013-03400-O (Massachusetts Superior Court, Middlesex County). These lawsuits allege generally that inadequate labeling and warnings for these products caused harm to patients. In addition, similar cases have been filed in state courts outside Massachusetts, in some of which the judicial authorities have established consolidated proceedings for their disposition. FMCH believes that these lawsuits are without merit, and will defend them vigorously.

Other Litigation and Potential Exposures

       On February 15, 2011, a qui tam relator's complaint under the False Claims Act against FMCH was unsealed by order of the United States District Court for the District of Massachusetts and served by the relator. The United States has not intervened in the case United States ex rel. Chris Drennen v. Fresenius Medical Care Holdings, Inc., 2009 Civ. 10179 (D. Mass.). The relator's complaint, which was first filed under seal in February 2009, alleges that the Company seeks and receives reimbursement from government payors for serum ferritin and hepatitis B laboratory tests that are medically unnecessary or not properly ordered by a physician. On March 6, 2011, the United States Attorney for the District of Massachusetts issued a subpoena seeking the production of documents related to the same laboratory tests that are the subject of the relator's complaint. FMCH has cooperated fully in responding to the subpoena, and will vigorously contest the relator's complaint.

       Subpoenas or search warrants have been issued by federal and state law enforcement authorities under the supervision of the United States Attorneys for the Districts of Connecticut, Southern Florida, Eastern Virginia and Rhode Island to American Access Care LLC (AAC), which the Company acquired in October 2011, and to the Company's Fresenius Vascular Access subsidiary which now operates former AAC centers as well as its own original facilities. Subpoenas have also been issued to certain of the Company's outpatient hemodialysis facilities for records relating to vascular access treatment and monitoring. The Company is cooperating fully in these investigations. Communications with certain of the investigating United States Attorney Offices indicate that the inquiry encompasses invoicing and coding for procedures commonly performed in vascular access centers and the documentary support for the medical necessity of such procedures. The AAC acquisition agreement contains customary indemnification obligations with respect to breaches of representations, warranties or covenants and certain other specified matters. As of October 18, 2013, a group of the prior owners of AAC exercised their right pursuant to the terms of the acquisition agreement to assume responsibility for responding to certain of the subpoenas. Pursuant to the AAC acquisition agreement the prior owners are obligated to indemnify the Company for certain liabilities that might arise from those subpoenas.

       The Company has received communications alleging conduct in countries outside the U.S. and Germany that may violate the U.S. Foreign Corrupt Practices Act ("FCPA") or other anti-bribery laws. The Audit and Corporate Governance Committee of the Company's Supervisory Board is conducting an investigation with the assistance of independent counsel. The Company voluntarily advised the U.S.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

Securities and Exchange Commission ("SEC") and the U.S. Department of Justice ("DOJ"). The Company's investigation and dialogue with the SEC and DOJ are ongoing. The Company has received a subpoena from the SEC requesting additional documents and a request from the DOJ for copies of the documents provided to the SEC. The Company is cooperating with the requests.

       Conduct has been identified that may result in monetary penalties or other sanctions under the FCPA or other anti-bribery laws. In addition, the Company's ability to conduct business in certain jurisdictions could be negatively impacted. The Company has previously recorded a non-material accrual for an identified matter. Given the current status of the investigations and remediation activities, the Company cannot reasonably estimate the range of possible loss that may result from identified matters or from the final outcome of the investigations or remediation activities.

       The Company's independent counsel, in conjunction with the Company's Compliance Department, have reviewed the Company's anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws, and appropriate enhancements are being implemented. The Company is fully committed to FCPA compliance.

       In December 2012 and January 2013, FMCH received subpoenas from the United States Attorneys for the District of Massachusetts and the Western District of Louisiana requesting production of a broad range of documents. Communications with the investigating United States Attorney Offices indicate that the inquiry relates to products manufactured by FMCH, which encompasses the Granuflo® and Naturalyte® acid concentrate products that are also the subject of personal injury litigation described above, as well as electron-beam sterilization of dialyzers, the Liberty peritoneal dialysis cycler, and 2008 series hemodialysis machines as related to the use of Granuflo® and Naturalyte®. FMCH is cooperating fully in the government's investigation.

       On June 13, 2014, the Ministry of Commerce of the People's Republic of China, (MOFCOM) launched an anti-dumping investigation into producers of hemodialysis equipment in the European Union and Japan, which includes certain of the Company's subsidiaries. The Company is cooperating in this investigation and answered questionnaires issued by MOFCOM.

       The Company filed claims for refunds contesting the Internal Revenue Service's ("IRS") disallowance of FMCH's deductions for civil settlement payments taken by FMCH in prior year tax returns. As a result of a settlement agreement with the IRS, the Company received a partial refund in September 2008 of $37,000, inclusive of interest and preserved its right to pursue claims in the United States Courts for refunds of all other disallowed deductions, which totaled approximately $126,000. On December 22, 2008, the Company filed a complaint for complete refund in the United States District Court for the District of Massachusetts, styled as Fresenius Medical Care Holdings, Inc. v. United States . On August 15, 2012, a jury entered a verdict for FMCH granting additional deductions of $95,000. On May 31, 2013, the District Court entered final judgment for FMCH in the refund amount of $50,400. On September 18, 2013, the IRS appealed the District Court's ruling to the United States Court of Appeals for the First Circuit (Boston). On August 13, 2014, the United States Court of Appeals for the First Circuit (Boston) affirmed the District Court's order.

       In August 2014, FMCH received a subpoena from the United States Attorney for the District of Maryland inquiring into FMCH's contractual arrangements with hospitals and physicians, including

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

contracts relating to the management of in-patient acute dialysis services. FMCH is cooperating in the investigation.

       From time to time, the Company is a party to or may be threatened with other litigation or arbitration, claims or assessments arising in the ordinary course of its business. Management regularly analyzes current information including, as applicable, the Company's defenses and insurance coverage and, as necessary, provides accruals for probable liabilities for the eventual disposition of these matters.

       The Company, like other healthcare providers, conducts its operations under intense government regulation and scrutiny. It must comply with regulations which relate to or govern the safety and efficacy of medical products and supplies, the marketing and distribution of such products, the operation of manufacturing facilities, laboratories and dialysis clinics, and environmental and occupational health and safety. With respect to its development, manufacture, marketing and distribution of medical products, if such compliance is not maintained, the Company could be subject to significant adverse regulatory actions by the FDA and comparable regulatory authorities outside the U.S. These regulatory actions could include warning letters or other enforcement notices from the FDA, and/or comparable foreign regulatory authority which may require the Company to expend significant time and resources in order to implement appropriate corrective actions. If the Company does not address matters raised in warning letters or other enforcement notices to the satisfaction of the FDA and/or comparable regulatory authorities outside the U.S., these regulatory authorities could take additional actions, including product recalls, injunctions against the distribution of products or operation of manufacturing plants, civil penalties, seizures of the Company's products and/or criminal prosecution. FMCH is currently engaged in remediation efforts with respect to three pending FDA warning letters. See "Regulatory and Legal Matters—Product Regulation" section of the 2013 Annual Report on Form 20-F for additional information. The Company must also comply with the laws of the United States, including the federal Anti-Kickback Statute, the federal False Claims Act, the federal Stark Law and the federal Foreign Corrupt Practices Act as well as other federal and state fraud and abuse laws. Applicable laws or regulations may be amended, or enforcement agencies or courts may make interpretations that differ from the Company's interpretations or the manner in which it conducts its business. Enforcement has become a high priority for the federal government and some states. In addition, the provisions of the False Claims Act authorizing payment of a portion of any recovery to the party bringing the suit encourage private plaintiffs to commence "qui tam" or "whistle blower" actions. By virtue of this regulatory environment, the Company's business activities and practices are subject to extensive review by regulatory authorities and private parties, and continuing audits, subpoenas, other inquiries, claims and litigation relating to the Company's compliance with applicable laws and regulations. The Company may not always be aware that an inquiry or action has begun, particularly in the case of "whistle blower" actions, which are initially filed under court seal.

       The Company operates many facilities throughout the United States and other parts of the world. In such a decentralized system, it is often difficult to maintain the desired level of oversight and control over the thousands of individuals employed by many affiliated companies. The Company relies upon its management structure, regulatory and legal resources, and the effective operation of its compliance program to direct, manage and monitor the activities of these employees. On occasion, the Company may identify instances where employees or other agents deliberately, recklessly or inadvertently contravene the Company's policies or violate applicable law. The actions of such persons may subject the Company and its subsidiaries to liability under the Anti-Kickback Statute, the Stark Law, the False Claims Act and the Foreign Corrupt Practices Act, among other laws and comparable laws of other countries.

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       Physicians, hospitals and other participants in the healthcare industry are also subject to a large number of lawsuits alleging professional negligence, malpractice, product liability, worker's compensation or related claims, many of which involve large claims and significant defense costs. The Company has been and is currently subject to these suits due to the nature of its business and expects that those types of lawsuits may continue. Although the Company maintains insurance at a level which it believes to be prudent, it cannot assure that the coverage limits will be adequate or that insurance will cover all asserted claims. A successful claim against the Company or any of its subsidiaries in excess of insurance coverage could have a material adverse effect upon it and the results of its operations. Any claims, regardless of their merit or eventual outcome, could have a material adverse effect on the Company's reputation and business.

       The Company has also had claims asserted against it and has had lawsuits filed against it relating to alleged patent infringements or businesses that it has acquired or divested. These claims and suits relate both to operation of the businesses and to the acquisition and divestiture transactions. The Company has, when appropriate, asserted its own claims, and claims for indemnification. A successful claim against the Company or any of its subsidiaries could have a material adverse effect upon its business, financial condition, and the results of its operations. Any claims, regardless of their merit or eventual outcome, could have a material adverse effect on the Company's reputation and business.

13.    Financial Instruments

Non-derivative Financial Instruments

       The following table presents the carrying amounts and fair values of the Company's non-derivative financial instruments at September 30, 2014, and December 31, 2013.

 
   
  September 30,
2014
  December 31,
2013
 
 
  Fair Value
Hierarchy
  Carrying
Amount
  Fair
Value
  Carrying
Amount
  Fair
Value
 
Assets                              

Cash and cash equivalents

  1   $ 587,504     587,504   $ 682,777     682,777  

Accounts receivable (1)

  2     3,333,062     3,333,062     3,190,392     3,190,392  

Notes Receivables

  3     178,887     189,938     165,807     175,768  

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable (1)

  2     685,019     685,019     666,526     666,526  

Short-term borrowings (1)

  2     431,419     431,419     158,990     158,990  

Long term debt, excluding 2012 Credit Agreement, Senior Notes, Convertible Bonds and Euro Notes

  2     485,971     485,971     679,847     679,847  

2012 Credit Agreement (2)

  2     2,977,968     2,977,968     2,707,145     2,710,270  

Senior Notes

  2     4,671,262     5,120,117     4,824,753     5,348,679  

Convertible Bonds

  2     466,363     503,320     -     -  

Euro Notes

  2     35,390     35,521     46,545     47,423  
Noncontrolling interests subject to put provisions   3     773,733     773,733     648,251     648,251  

(1) Also includes amounts receivable from or payable to related parties.

(2) Includes Term Loan A-2.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       The carrying amounts in the table are included in the Consolidated Balance Sheets under the indicated captions or in the case of long-term debt, in the captions shown in Note 6.

       The significant methods and assumptions used in estimating the fair values of non-derivative financial instruments are as follows:

       Cash and cash equivalents are stated at nominal value which equals the fair value.

       Short-term financial instruments such as accounts receivable, accounts payable and short-term borrowings are valued at their carrying amounts, which are reasonable estimates of the fair value due to the relatively short period to maturity of these instruments.

       The valuation of notes receivable was determined using significant unobservable inputs. They were valued using a constructed index based upon similar instruments with comparable credit ratings, terms, tenor, interest rates and that are within the Company's industry. The Company tracked the prices of the constructed index from the note issuance date to the reporting date to determine fair value.

       The fair values of major long-term financial liabilities are calculated on the basis of market information. Instruments for which market quotes are available are measured using these quotes. The fair values of the other long-term financial liabilities are calculated at the present value of the respective future cash flows. To determine these present values, the prevailing interest rates and credit spreads for the Company as of the balance sheet date are used.

       The valuation of noncontrolling interests subject to put provisions is determined using significant unobservable inputs. See Note 10 for a discussion of the Company's methodology for estimating the fair value of these noncontrolling interests subject to put obligations.

       Currently, there is no indication that a decrease in the value of the Company's financing receivables is probable. Therefore, the allowances on credit losses of financing receivables are immaterial.


Derivative Financial Instruments

       The Company is exposed to market risk from changes in foreign exchange rates and interest rates. In order to manage the risk of currency exchange rate and interest rate fluctuations, the Company enters into various hedging transactions by means of derivative instruments with highly rated financial institutions as authorized by the Company's General Partner. On a quarterly basis the Company performs an assessment of its counterparty credit risk. The Company currently considers this risk to be low. The Company's policy, which has been consistently followed, is that financial derivatives be used only for the purpose of hedging foreign currency and interest rate exposure.

       In certain instances, the Company enters into derivative contracts that do not qualify for hedge accounting but are utilized for economic purposes ("economic hedges"). The Company does not use financial instruments for trading purposes.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       The Company established guidelines for risk assessment procedures and controls for the use of financial instruments. They include a clear segregation of duties with regard to execution on one side and administration, accounting and controlling on the other.

       To reduce the credit risk arising from derivatives the Company concluded Master Netting Agreements with banks. Through such agreements, positive and negative fair values of the derivative contracts could be offset against one another if a partner becomes insolvent. This offsetting is valid for transactions where the aggregate amount of obligations owed to and receivable from are not equal. If insolvency occurs, the party which owes the larger amount is obliged to pay the other party the difference between the amounts owed in the form of one net payment.

       The Company elects not to offset the fair values of derivative financial instruments subject to master netting agreements in its Consolidated Balance Sheets.

       At September 30, 2014 and December 31, 2013, the Company had $13,736 and $18,334 of derivative financial assets subject to netting arrangements and $53,616 and $16,371 of derivative financial liabilities subject to netting arrangements. Offsetting these derivative financial instruments would have resulted in net assets of $4,534 and $12,169 as well as net liabilities of $44,414 and $10,207 at September 30, 2014 and December 31, 2013, respectively.

Foreign Exchange Risk Management

       The Company conducts business on a global basis in various currencies, though a majority of its operations are in Germany and the United States. For financial reporting purposes, the Company has chosen the U.S. dollar as its reporting currency. Therefore, changes in the rate of exchange between the U.S. dollar and the local currencies in which the financial statements of the Company's international operations are maintained affect its results of operations and financial position as reported in its consolidated financial statements.

       The Company's exposure to market risk for changes in foreign exchange rates relates to transactions such as sales and purchases. The Company has significant amounts of sales of products invoiced in euro from its European manufacturing facilities to its other international operations and, to a lesser extent, sales of products invoiced in other non-functional currencies. This exposes the subsidiaries to fluctuations in the rate of exchange between the euro and the currency in which their local operations are conducted. For the purpose of hedging existing and foreseeable foreign exchange transaction exposures the Company enters into foreign exchange forward contracts and, on a small scale, foreign exchange options. At September 30, 2014 and December 31, 2013, the Company had no foreign exchange options.

       Changes in the fair value of the effective portion of foreign exchange forward contracts designated and qualifying as cash flow hedges of forecasted product purchases and sales are reported in Accumulated Other Comprehensive Income ("AOCI"). Additionally, in connection with intercompany loans in foreign currency, the Company uses foreign exchange swaps thus assuring that no foreign exchange risks arise from those loans, which, if they qualify for cash flow hedge accounting, are also reported in AOCI. These amounts recorded in AOCI are subsequently reclassified into earnings as a component of cost of revenues for those contracts that hedge product purchases or as an adjustment of interest income/expense for those contracts that hedge loans, in the same period in which the hedged transaction affects earnings. The

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

notional amounts of foreign exchange contracts in place that are designated and qualify as cash flow hedges totaled $472,291 and $238,983 at September 30, 2014 and December 31, 2013, respectively.

       The Company also enters into derivative contracts for forecasted product purchases and sales and for intercompany loans in foreign currency that do not qualify for hedge accounting but are utilized for economic hedges as defined above. In these two cases, the change in value of the economic hedge is recorded in the income statement and usually offsets the change in value recorded in the income statement for the underlying asset or liability. The notional amounts of economic hedges that do not qualify for hedge accounting totaled $1,727,599 and $1,512,559 at September 30, 2014 and December 31, 2013, respectively.

Interest Rate Risk Management

       The Company enters into derivatives, particularly interest rate swaps and to a certain extent, interest rate options, to protect against the risk of rising interest rates. These interest rate derivatives are designated as cash flow hedges and have been entered into in order to effectively convert payments based on variable interest rates into payments at a fixed interest rate. The euro-denominated interest rate swaps expire in 2016 and have an interest rate of 1.73%. Interest payable and receivable under the swap agreements is accrued and recorded as an adjustment to interest expense.

       At September 30, 2014 and December 31, 2013, the notional amount of the euro-denominated interest rate swaps in place was €100,000 and €100,000 ($125,830 and $137,910 at September 30, 2014 and December 31, 2013, respectively).

       In addition, the Company also enters into interest rate hedges ("pre-hedges") in anticipation of future debt issuance to effectively convert the variable interest rate related to the future debt to a fixed interest rate. These pre-hedges are settled at the issuance date of the corresponding debt with the settlement amount recorded in AOCI amortized to interest expense over the life of the pre-hedges. At September 30, 2014 and December 31, 2013, the Company had $93,826 and $118,844, respectively, related to such settlements of pre-hedges deferred in AOCI, net of tax.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

Derivative Financial Instruments Valuation

       The following table shows the carrying amounts of the Company's derivatives at September 30, 2014 and December 31, 2013.

 
  September 30, 2014   December 31, 2013  
 
  Assets (2)   Liabilities (2)   Assets (2)   Liabilities (2)  
Derivatives in cash flow hedging relationships (1)                          

Current

                         

Foreign exchange contracts

    2,664     (15,807 )   4,985     (2,719 )

Non-current

   
 
   
 
   
 
   
 
 

Foreign exchange contracts

    48     (3,441 )   759     (374 )

Interest rate contracts

    -     (4,197 )   -     (4,392 )
                   
Total   $ 2,712   $ (23,445 ) $ 5,744   $ (7,485 )
                   
                   

Derivatives not designated as hedging instruments (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                         

Foreign exchange contracts

    13,205     (31,109 )   11,679     (22,982 )

Non-current

   
 
   
 
   
 
   
 
 

Foreign exchange contracts

    207     (3,172 )   1,060     (820 )

Derivatives embedded in the Convertible Bonds

    -     (37,246 )   -     -  

Share Options to secure the Convertible Bonds

    37,246     -     -     -  
                   
Total   $ 50,658   $ (71,527 ) $ 12,739   $ (23,802 )
                   
                   

(1) At September 30, 2014 and December 31, 2013, the valuation of the Company's derivatives was determined using Significant Other Observable Inputs (Level 2) in accordance with the fair value hierarchy levels established in U.S. GAAP.

(2) Derivative instruments are marked to market each reporting period resulting in carrying amounts being equal to fair values at the reporting date.

       The carrying amounts for the current portion of derivatives indicated as assets in the table above are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets while the current portion of those indicated as liabilities are included in Accrued expenses and other current liabilities. The non-current portions indicated as assets or liabilities are included in the Consolidated Balance Sheets in Other assets or Other liabilities, respectively.

       The significant methods and assumptions used in estimating the fair values of derivative financial instruments are as follows:

       The fair value of interest rate swaps is calculated by discounting the future cash flows on the basis of the market interest rates applicable for the remaining term of the contract as of the balance sheet date. To determine the fair value of foreign exchange forward contracts, the contracted forward rate is compared to the current forward rate for the remaining term of the contract as of the balance sheet date. The result is then discounted on the basis of the market interest rates prevailing at the balance sheet date for the applicable currency. The fair value of the embedded options of the Convertible Bonds is offset by the Share Options entered into by the Company. The Share Options are linked with the Convertible Bonds and their value is available on XETRA, see Note 6 for more information.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       The Company includes its own credit risk for financial instruments deemed liabilities and counterparty-credit risks for financial instruments deemed assets when measuring the fair value of derivative financial instruments.

The Effect of Derivatives on the Consolidated Financial Statements

 
   
   
   
  Amount of (Gain) or Loss
Reclassified from AOCI in
Income
(Effective Portion)
for the nine months ended
September 30,
 
 
  Amount of Gain or (Loss) Recognized in OCI on
Derivatives
(Effective Portion)
for the nine months ended September 30,
   
 
 
  Location of (Gain) or
Loss Reclassified from
AOCI in Income
(Effective Portion)
 
Derivatives in Cash Flow
Hedging Relationships
  2014   2013   2014   2013  
Interest rate contracts   $ 14,791   $ (2,544 ) Interest income/expense   $ 20,483   $ 20,476  
Foreign exchange contracts     (20,853 )   2,157   Costs of Revenue     4,183     (1,307 )
Foreign exchange contracts               Interest income/expense         577  
                       
    $ (6,062 ) $ (387 )     $ 24,666   $ 19,746  
                       
                       

 

 
   
  Amount of (Gain) or Loss Recognized in Income on
Derivatives
for the nine months ended September 30,
 
 
  Location of (Gain) or
Loss Recognized in
Income on Derivative
 
Derivatives not Designated
as Hedging Instruments
  2014   2013  
Foreign exchange contracts   Selling, general and administrative expense   $ (39,324 ) $ (27,412 )
Foreign exchange contracts   Interest income/expense     6,868     5,931  
               
        $ (32,456 ) $ (21,481 )
               
               

       For foreign exchange derivatives, the Company expects to recognize $11,363 of losses deferred in AOCI at September 30, 2014, in earnings during the next twelve months.

       The Company expects to incur additional interest expense of $22,190 over the next twelve months which is currently deferred in AOCI. At September 30, 2014, this amount reflects the projected amortization of the settlement amount of the terminated swaps and the current fair value of the additional interest payments resulting from the remaining interest rate swap maturing in 2016.

       At September 30, 2014, the Company had foreign exchange derivatives with maturities of up to 20 months and interest rate swaps with maturities of up to 25 months.

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Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

14.    Other Comprehensive Income (Loss), net of tax

       Changes in AOCI, net of tax, by component for the nine months ended September 30, 2014 and 2013 are as follows:

 
  Gain (Loss)
related to
cash flow
hedges
  Actuarial
gain (loss) on
defined
benefit
pension plans
  Gain (Loss)
related to
foreign-
currency
translation
  Total, before
non-
controlling
interests
  Non-
controlling
interests
  Total  
Balance at December 31, 2012   $ (138,341 ) $ (179,423 ) $ (174,349 ) $ (492,113 ) $ 2,869   $ (489,244 )

Other comprehensive income (loss) before reclassifications

    124     -     (95,360 )   (95,236 )   (1,554 )   (96,790 )

Amounts reclassified from AOCI

    14,122     11,789     -     25,911     -     25,911  
                           
Other comprehensive income (loss) after reclassifications     14,246     11,789     (95,360 )   (69,325 )   (1,554 )   (70,879 )
                           
Balance at September 30, 2013   $ (124,095 ) $ (167,634 ) $ (269,709 ) $ (561,438 ) $ 1,315   $ (560,123 )
                           
                           
Balance at December 31, 2013   $ (121,856 ) $ (141,987 ) $ (286,744 ) $ (550,587 ) $ 825   $ (549,762 )
                           

Other comprehensive income (loss) before reclassifications

    (4,287 )   -     (203,099 )   (207,386 )   (3,579 )   (210,965 )

Amounts reclassified from AOCI

    17,929     8,178     -     26,107     -     26,107  
                           
Other comprehensive income (loss) after reclassifications     13,642     8,178     (203,099 )   (181,279 )   (3,579 )   (184,858 )
                           
Balance at September 30, 2014   $ (108,214 ) $ (133,809 ) $ (489,843 ) $ (731,866 ) $ (2,754 ) $ (734,620 )
                           
                           

       Reclassifications out of AOCI for the nine months ended September 30, 2014 and 2013 are as follows:

Details about AOCI Components
  Amount of (Gain) Loss reclassified from
AOCI in Income
  Location of (Gain) Loss reclassified
from AOCI in Income
 
  For the nine months ended
September 30,
   
 
  2014   2013    
(Gain) Loss related to cash flow hedges                

Interest rate contracts

  $ 20,483   $ 20,476   Interest income/expense

Foreign exchange contracts

    4,183     (1,307 ) Costs of Revenue

Foreign exchange contracts

    -     577   Interest income/expense
             
      24,666     19,746   Total before tax
             
      (6,737 )   (5,624 ) Tax expense or benefit
             
    $ 17,929   $ 14,122   Net of tax
             
Actuarial (Gain) Loss on defined benefit pension plans                

Amortization of unrealized (gain) loss

    12,959     19,112   (1)
             
      12,959     19,112   Total before tax
             
      (4,781 )   (7,323 ) Tax expense or benefit
             
    $ 8,178   $ 11,789   Net of tax
             
Total reclassifications for the period   $ 26,107   $ 25,911   Net of tax
             
             

(1) Included in the computation of net periodic pension cost (see Note 9 for additional details).

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

15.    Segment and Corporate Information

       The Company has identified three operating segments, North America Segment, EMEALA and Asia-Pacific, which were determined based upon how the Company manages its businesses. All segments are primarily engaged in providing dialysis care services and the distribution of products and equipment for the treatment of ESRD. For reporting purposes, the Company has aggregated the EMEALA and Asia-Pacific operating segments as the "International Segment." The segments are aggregated due to their similar economic characteristics. These characteristics include same services provided and same products sold, the same type of patient population, similar methods of distribution of products and services and similar economic environments. The General Partner's management board member responsible for the profitability and cash flow of each segment's various businesses supervises the management of each operating segment. The accounting policies of the segments are the same as those the Company applies in preparing the consolidated financial statements under U.S. GAAP.

       Management evaluates each segment using measures that reflect all of the segment's controllable revenues and expenses. With respect to the performance of business operations, management believes that the most appropriate U.S. GAAP measures are revenue, operating income and operating income margin. The Company does not include income taxes as it believes this is outside the segments' control. Financing is a corporate function, which the Company's segments do not control. Therefore, the Company does not include interest expense relating to financing as a segment measurement. Similarly, the Company does not allocate certain costs, which relate primarily to certain headquarters overhead charges, including accounting and finance, etc. ("Corporate"), because the Company believes that these costs are also not within the control of the individual segments. Production of products, production asset management, quality management and procurement are centrally managed at Corporate by Global Manufacturing Operations. The Company's global research and development is also centrally managed at Corporate. These Corporate activities do not fulfill the definition of a segment. Products are transferred to the segments at cost; therefore no internal profit is generated. The associated internal revenues for the product transfers and their elimination are recorded as Corporate activities. Capital expenditures for production are based on the expected demand of the segments and consolidated profitability considerations. In addition, certain revenues, investments and intangible assets, as well as any related expenses, are not allocated to a segment but accounted for as Corporate.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

       Information pertaining to the Company's segment and Corporate activities for the three- and nine-months periods ended September 30, 2014 and 2013 is set forth below.

 
  North
America
Segment
  International
Segment
  Segment
Totals
  Corporate   Total  
Three months ended September 30, 2014                                

Net revenue external customers

 
$

2,709,738
 
$

1,385,582
 
$

4,095,320
 
$

17,442
 
$

4,112,762
 

Inter - segment revenue

    2,858     -     2,858     (2,858 )   -  
                       

Revenue

    2,712,596     1,385,582     4,098,178     14,584     4,112,762  
                       

Depreciation and amortization

    (92,389 )   (48,310 )   (140,699 )   (36,662 )   (177,361 )
                       

Operating income

    413,203     268,516     681,719     (91,795 )   589,924  
                       

Income (loss) from equity method investees

    1,966     1,485     3,451     -     3,451  

Capital expenditures, acquisitions and investments

    687,452     74,653     762,105     79,021     841,126  

Three months ended September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue external customers

 
$

2,436,141
 
$

1,222,026
 
$

3,658,167
 
$

7,965
 
$

3,666,132
 

Inter - segment revenue

    2,591     -     2,591     (2,591 )   -  
                       

Revenue

    2,438,732     1,222,026     3,660,758     5,374     3,666,132  
                       

Depreciation and amortization (1)

    (83,509 )   (46,602 )   (130,111 )   (34,168 )   (164,279 )
                       

Operating income (2)

    413,473     213,521     626,994     (69,734 )   557,260  
                       

Income (loss) from equity method investees (3)

    3,300     1,994     5,294     -     5,294  

Capital expenditures, acquisitions and investments

    284,453     53,260     337,713     36,768     374,481  

Nine months ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue external customers

 
$

7,623,632
 
$

3,843,099
 
$

11,466,731
 
$

44,425
 
$

11,511,156
 

Inter - segment revenue

    6,407     -     6,407     (6,407 )   -  
                       

Revenue

    7,630,039     3,843,099     11,473,138     38,018     11,511,156  
                       

Depreciation and amortization

    (267,211 )   (139,643 )   (406,854 )   (106,633 )   (513,487 )
                       

Operating Income

    1,149,478     691,971     1,841,449     (250,357 )   1,591,092  
                       

Income (loss) from equity method investees

    16,335     5,607     21,942     -     21,942  

Segment assets

    15,581,180     6,319,867     21,901,047     2,351,529     24,252,576  

thereof investments in equity method investees

    280,444     399,065     679,509     -     679,509  

Capital expenditures, acquisitions and investments (4)

    1,175,701     320,024     1,495,725     199,357     1,695,082  

Nine months ended September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue external customers

 
$

7,098,638
 
$

3,619,000
 
$

10,717,638
 
$

24,930
 
$

10,742,568
 

Inter - segment revenue

    5,437     -     5,437     (5,437 )   -  
                       

Revenue

    7,104,075     3,619,000     10,723,075     19,493     10,742,568  
                       

Depreciation and amortization (1)

    (245,382 )   (138,933 )   (384,315 )   (95,118 )   (479,433 )
                       

Operating Income (2)

    1,170,176     623,618     1,793,794     (198,982 )   1,594,812  
                       

Income (loss) from equity method investees (3)

    9,289     5,229     14,518     -     14,518  

Segment assets

    14,238,874     6,034,705     20,273,579     2,260,941     22,534,520  

thereof investments in equity method investees

    256,195     383,708     639,903     -     639,903  

Capital expenditures, acquisitions and investments (4)

    504,733     202,137     706,870     103,062     809,932  

(1) Depreciation in the amount of $1,034 and $2,918 for the three and nine months ended September 30, 2013, respectively, relating to research and development has been reclassified between the North America Segment, the International Segment and Corporate to conform to the current year's presentation.

(2) Certain items, in the net aggregate amount of $7,003 and $18,373 for the three and nine months ended September 30, 2013, respectively, relating to research and development, compensation expense and income from equity method investees have been reclassified between the North America Segment, the International Segment and Corporate to conform to the current year's presentation as applicable.

(3) Income (loss) from equity method investees in the amount of $1,432 and $1,753 for the three and nine months ended September 30, 2013, respectively, has been reclassified between the North America Segment, the International Segment and Corporate to conform to the current year's presentation.

(4) North America and International acquisitions exclude $25,905 and $170,616, respectively of non-cash acquisitions for 2014 and International acquisitions exclude $8,403 of non-cash acquisitions for 2013.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

16.    Supplementary Cash Flow Information

       The following additional information is provided with respect to the Consolidated Statements of Cash Flows:

 
  For the nine months
ended September 30,
 
 
  2014   2013  
Supplementary cash flow information:              

Cash paid for interest

  $ 353,381   $ 337,143  
           

Cash paid for income taxes (1)

  $ 521,791   $ 373,217  
           

Cash inflow for income taxes from stock option exercises

  $ 6,495   $ 6,297  
           
Supplemental disclosures of cash flow information:              

Details for acquisitions:

             

Assets acquired

  $ (1,350,681 ) $ (158,447 )

Liabilities assumed

    364,086     19,923  

Noncontrolling interest subject to put provisions

    3,558     16,317  

Noncontrolling interest

    97,209     4,558  

Pending payments for purchase considerations

    11,608     8,403  
           

Cash paid

    (874,220 )   (109,246 )

Less cash acquired

    92,580     5,471  
           

Net cash paid for acquisitions

    (781,640 )   (103,775 )

Cash paid for investments

    (258,146 )   (188,538 )

Cash paid for intangible assets

    (8,925 )   (5,143 )
           

Total cash paid for acquisitions and investments, net of cash acquired, and purchases of intangible assets

  $ (1,048,711 ) $ (297,456 )
           
           

(1) Net of tax refund.

17.    Subsequent Events

       On October 29, 2014 the Company issued $900 million aggregate principal amount of U.S. dollar-denominated senior unsecured notes ("the Senior Notes") to repay Term Loan A-2 under our 2012 Credit Agreement as well as other short term debt, and for acquisitions and general corporate purposes. The Senior Notes, issued at par, consist of $500 million aggregate principal amount with a coupon of 4.125% senior notes due October 15, 2020 and $400 million aggregate principal amount with a coupon of 4.75% senior notes due October 15, 2024.

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FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

18.    Supplemental Condensed Combining Information

       FMC Finance III, a former wholly-owned subsidiary of the Company, issued 6 7 / 8 % Senior Notes due 2017 in July 2007. On June 20, 2011, Fresenius Medical Care US Finance, Inc. ("US Finance") acquired substantially all of the assets of FMC Finance III and assumed its obligations, including the 6 7 / 8 % Senior Notes and the related indenture. The 6 7 / 8 % Senior Notes are fully and unconditionally guaranteed, jointly and severally on a senior basis, by the Company and by FMCH and D-GmbH, together the ("Guarantor Subsidiaries"). The 6 7 / 8 % Senior Notes and related guarantees were issued in an exchange offer registered under the Securities Act of 1933. The financial statements in this report present the financial condition, results of operations and cash flows of the Company, on a consolidated basis at September 30, 2014 and December 31, 2013 and for the nine-months periods ended September 30, 2014 and 2013. The following combining financial information for the Company is at September 30, 2014 and December 31, 2013 and for the nine-months periods ended September 30, 2014 and 2013, segregated between FMC US Finance as issuer, the Company, D-GmbH and FMCH as guarantors, and the Company's other businesses (the "Non-Guarantor Subsidiaries"). For purposes of the condensed combining information, the Company and the Guarantor Subsidiaries carry their investments under the equity method. Other (income) expense includes income (loss) related to investments in consolidated subsidiaries recorded under the equity method for purposes of the condensed combining information. In addition, other (income) expense includes income and losses from profit and loss transfer agreements as well as dividends received.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 
  For the nine months ended September 30, 2014  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Net revenue   $ -   $ -   $ 1,642,785   $ -   $ 12,534,090   $ (2,665,719 ) $ 11,511,156  
Cost of revenue     -     -     1,050,811     -     9,513,473     (2,634,766 )   7,929,518  
                               

Gross profit

    -     -     591,974     -     3,020,617     (30,953 )   3,581,638  
                               
Operating expenses (income):                                            

Selling, general and administrative (1)

    -     138,756     125,419     73,380     1,517,138     44,890     1,899,583  

Research and development

    -     -     55,608     -     35,355     -     90,963  
                               
Operating (loss) income     -     (138,756 )   410,947     (73,380 )   1,468,124     (75,843 )   1,591,092  
                               
Other (income) expense:                                            

Interest, net

    (5,194 )   182,173     (3,824 )   137,678     (17,063 )   -     293,770  

Other, net

    -     (1,054,763 )   309,955     (570,440 )   -     1,315,248     -  
                               
Income (loss) before income taxes     5,194     733,834     104,816     359,382     1,485,187     (1,391,091 )   1,297,322  

Income tax expense (benefit)

    1,877     23,887     104,570     (83,262 )   594,724     (201,502 )   440,294  
                               
Net Income (loss)     3,317     709,947     246     442,644     890,463     (1,189,589 )   857,028  
Net Income attributable to noncontrolling interests     -     -     -     -     -     147,081     147,081  
                               
Net income (loss) attributable to shareholders of FMC-AG & Co. KGaA   $ 3,317   $ 709,947   $ 246   $ 442,644   $ 890,463   $ (1,336,670 ) $ 709,947  
                               
                               

(1) Selling, general and administrative is presented net of Gain on Sale of dialysis clinics and net of income from equity method investees.

 
  For the nine months ended September 30, 2013  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Net revenue   $ -   $ -   $ 1,525,867   $ -   $ 11,646,195   $ (2,429,494 ) $ 10,742,568  
Cost of revenue     -     -     1,009,678     -     8,699,457     (2,403,587 )   7,305,548  
                               

Gross profit

    -     -     516,189     -     2,946,738     (25,907 )   3,437,020  
                               
Operating expenses (income):                                            

Selling, general and administrative (1)

    -     69,946     156,445     (5,723 )   1,505,597     21,439     1,747,704  

Research and development

    -     -     54,985     -     39,687     (168 )   94,504  
                               
Operating (loss) income     -     (69,946 )   304,759     5,723     1,401,454     (47,178 )   1,594,812  
                               
Other (income) expense:                                            

Interest, net

    (5,144 )   149,956     5,767     131,973     27,900     -     310,452  

Other, net

    -     (1,001,160 )   238,088     (591,605 )   -     1,354,677     -  
                               
Income (loss) before income taxes     5,144     781,258     60,904     465,355     1,373,554     (1,401,855 )   1,284,360  

Income tax expense (benefit)

    1,867     20,261     67,212     (49,806 )   497,871     (116,532 )   420,873  
                               
Net Income (loss)     3,277     760,997     (6,308 )   515,161     875,683     (1,285,323 )   863,487  
Net Income attributable to noncontrolling interests     -     -     -     -     -     102,490     102,490  
                               
Net income (loss) attributable to shareholders of FMC-AG & Co. KGaA   $ 3,277   $ 760,997   $ (6,308 ) $ 515,161   $ 875,683   $ (1,387,813 ) $ 760,997  
                               
                               

(1) Selling, general and administrative is presented net of Gain on Sale of dialysis clinics and net of income from equity method investees.

55


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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 
  For the nine months ended September 30, 2014  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG & Co. KGaA   D-GmbH   FMCH   Non-Guarantor
Subsidiaries
  Combining
Adjustment
  Combined Total  
Net Income   $ 3,317   $ 709,947   $ 246   $ 442,644   $ 890,463   $ (1,189,589 ) $ 857,028  
                               

Gain (loss) related to cash flow hedges

    -     35,416     -     -     (16,812 )   -     18,604  

Actuarial gain (loss) on defined benefit pension plans

    -     148     2,809     9,718     284     -     12,959  

Gain (loss) related to foreign currency translation

    -     332,786     (65,579 )   -     (480,019 )   6,134     (206,678 )

Income tax (expense) benefit related to components of other comprehensive income

    -     (10,041 )   (820 )   (3,834 )   4,952     -     (9,743 )
                               
Other comprehensive income (loss), net of tax     -     358,309     (63,590 )   5,884     (491,595 )   6,134     (184,858 )
                               
Total comprehensive income   $ 3,317   $ 1,068,256   $ (63,344 ) $ 448,528   $ 398,868   $ (1,183,455 ) $ 672,170  

Comprehensive income attributable to noncontrolling interests

    -     -     -     -     -     143,502     143,502  
                               
Comprehensive income attributable to shareholders of FMC-AG & Co. KGaA   $ 3,317   $ 1,068,256   $ (63,344 ) $ 448,528   $ 398,868   $ (1,326,957 ) $ 528,668  
                               
                               

 

 
  For the nine months ended September 30, 2013  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG & Co. KGaA   D-GmbH   FMCH   Non-Guarantor
Subsidiaries
  Combining
Adjustment
  Combined Total  
Net Income   $ 3,277   $ 760,997   $ (6,308 ) $ 515,161   $ 875,683   $ (1,285,323 ) $ 863,487  
                               

Gain (loss) related to cash flow hedges

    -     17,880     -     -     1,479     -     19,359  

Actuarial gain (loss) on defined benefit pension plans

    -     97     1,906     16,926     183     -     19,112  

Gain (loss) related to foreign currency translation

    -     (83,209 )   17,734     -     (37,241 )   5,802     (96,914 )

Income tax (expense) benefit related to components of other comprehensive income

    -     (5,172 )   (556 )   (6,677 )   (31 )   -     (12,436 )
                               
Other comprehensive income (loss), net of tax     -     (70,404 )   19,084     10,249     (35,610 )   5,802     (70,879 )
                               
Total comprehensive income   $ 3,277   $ 690,593   $ 12,776   $ 525,410   $ 840,073   $ (1,279,521 ) $ 792,608  

Comprehensive income attributable to noncontrolling interests

    -     -     -     -     -     100,936     100,936  
                               
Comprehensive income attributable to shareholders of FMC-AG & Co. KGaA   $ 3,277   $ 690,593   $ 12,776   $ 525,410   $ 840,073   $ (1,380,457 ) $ 691,672  
                               
                               

56


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 
  At September 30, 2014  
 
  Issuer   Guarantors    
   
   
 
 
  FMC
US Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-
Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Current assets:                                            

Cash and cash equivalents

  $ 1   $ 1   $ 4,726   $ -   $ 582,776   $ -   $ 587,504  

Trade accounts receivable, less allowance for doubtful accounts

    -     -     149,763     -     3,001,707     1,766     3,153,236  

Accounts receivable from related parties

    1,249,084     1,292,148     1,126,281     1,635,397     4,277,989     (9,401,073 )   179,826  

Inventories

    -     -     262,691     -     1,078,291     (155,778 )   1,185,204  

Prepaid expenses and other current assets

    -     67,268     41,695     17     962,362     36,515     1,107,857  

Deferred taxes

    -     -     -     -     289,376     (44,266 )   245,110  
                               

Total current assets

    1,249,085     1,359,417     1,585,156     1,635,414     10,192,501     (9,562,836 )   6,458,737  

Property, plant and equipment, net

 

 

-

 

 

557

 

 

245,736

 

 

-

 

 

3,126,556

 

 

(119,611

)

 

3,253,238

 
Intangible assets     -     165     60,608     -     709,585     (84 )   770,274  
Goodwill     -     -     57,326     -     12,303,871     -     12,361,197  
Deferred taxes     -     83,953     14,391     -     121,721     (113,902 )   106,163  
Other assets and notes receivables (1)     -     13,897,666     52,236     13,274,512     5,536,577     (31,458,024 )   1,302,967  
                               

Total assets

  $ 1,249,085   $ 15,341,758   $ 2,015,453   $ 14,909,926   $ 31,990,811   $ (41,254,457 ) $ 24,252,576  
                               
                               
Current liabilities:                                            

Accounts payable

  $ -   $ 603   $ 29,047   $ -   $ 508,678   $ -   $ 538,328  

Accounts payable to related parties

    -     2,083,992     836,041     1,623,891     5,200,825     (9,598,058 )   146,691  

Accrued expenses and other current liabilities

    11,833     64,092     168,209     9,656     1,905,434     (22,157 )   2,137,067  

Short-term borrowings

    -     0     -     -     139,997     -     139,997  

Short-term borrowings from related parties

    -     -     -     -     291,422     -     291,422  

Current portion of long-term debt and capital lease obligations

    -     63,554     -     800,000     60,612     -     924,166  

Income tax payable

    -     12,331     -     -     66,843     6,184     85,358  

Deferred taxes

    -     994     9,052     -     66,753     (43,353 )   33,446  
                               

Total current liabilities

    11,833     2,225,566     1,042,349     2,433,547     8,240,564     (9,657,384 )   4,296,475  

Long term debt and capital lease obligations, less current portion

 

 

1,163,767

 

 

516,353

 

 

-

 

 

2,177,968

 

 

7,370,280

 

 

(3,515,580

)

 

7,712,788

 
Long term borrowings from related parties     -     3,029,597     -     1,945,322     42,062     (5,016,981 )   -  
Other liabilities     -     41,881     6,657     48,022     273,608     22,431     392,599  
Pension liabilities     -     12,732     245,052     -     145,097     -     402,881  
Income tax payable     599     28,144     -     -     25,388     121,381     175,512  
Deferred taxes     -     -     -     -     775,068     (26,600 )   748,468  
                               

Total liabilities

    1,176,199     5,854,273     1,294,058     6,604,859     16,872,067     (18,072,733 )   13,728,723  

Noncontrolling interests subject to put provisions

 

 

-

 

 

-

 

 

0

 

 

-

 

 

773,733

 

 

-

 

 

773,733

 
Redeemable Preferred Stock     -     -     -     235,141     (235,141 )   -     -  

Total FMC-AG & Co. KGaA shareholders' equity

 

 

72,886

 

 

9,487,485

 

 

721,395

 

 

8,069,926

 

 

14,317,517

 

 

(23,181,724

)

 

9,487,485

 
Noncontrolling interests not subject to put provisions     -     -     -     -     262,635     -     262,635  
                               
Total equity     72,886     9,487,485     721,395     8,069,926     14,580,152     (23,181,724 )   9,750,120  
                               

Total liabilities and equity

  $ 1,249,085   $ 15,341,758   $ 2,015,453   $ 14,909,926   $ 31,990,811   $ (41,254,457 ) $ 24,252,576  
                               
                               

(1) Other Assets and notes receivables are presented net of investment in equity method investees.

57


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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 
  At December 31, 2013  
 
  Issuer   Guarantors    
   
   
 
 
  FMC
US Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-
Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Current assets:                                            

Cash and cash equivalents

  $ 0   $ 13   $ 4,490   $ -   $ 672,206   $ 6,068   $ 682,777  

Trade accounts receivable, less allowance for doubtful accounts

    -     -     152,480     -     2,882,736     2,058     3,037,274  

Accounts receivable from related parties

    1,269,092     960,137     815,748     1,643,394     4,073,975     (8,609,228 )   153,118  

Inventories

    -     -     287,625     -     946,790     (137,311 )   1,097,104  

Prepaid expenses and other current assets

    -     71,939     41,240     167     879,085     44,960     1,037,391  

Deferred taxes

    -     -     -     -     322,337     (43,285 )   279,052  
                               

Total current assets

    1,269,092     1,032,089     1,301,583     1,643,561     9,777,129     (8,736,738 )   6,286,716  

Property, plant and equipment, net

 

 

-

 

 

734

 

 

238,469

 

 

-

 

 

2,980,268

 

 

(127,517

)

 

3,091,954

 
Intangible assets     -     501     73,166     -     684,290     (81 )   757,876  
Goodwill     -     -     62,829     -     11,595,358     -     11,658,187  
Deferred taxes     -     80,931     14,209     -     118,306     (109,279 )   104,167  
Other assets and notes receivables (1)     -     13,955,933     47,661     12,583,487     5,234,132     (30,600,207 )   1,221,006  
                               

Total assets

  $ 1,269,092   $ 15,070,188   $ 1,737,917   $ 14,227,048   $ 30,389,483   $ (39,573,822 ) $ 23,119,906  
                               
                               
Current liabilities:                                            

Accounts payable

  $ -   $ 2,193   $ 28,689   $ -   $ 511,715   $ -   $ 542,597  

Accounts payable to related parties

    -     1,896,712     522,719     1,600,480     4,931,344     (8,827,326 )   123,929  

Accrued expenses and other current liabilities

    29,770     45,897     129,727     9,403     1,786,709     11,027     2,012,533  

Short-term borrowings

    -     60     -     -     96,588     -     96,648  

Short-term borrowings from related parties

    -     -     -     -     62,342     -     62,342  

Current portion of long-term debt and capital lease obligations

    -     271,090     -     200,000     40,280     -     511,370  

Income tax payable

    -     114,197     -     -     56,163     -     170,360  

Deferred taxes

    -     2,331     9,002     -     64,539     (41,678 )   34,194  
                               

Total current liabilities

    29,770     2,332,480     690,137     1,809,883     7,549,680     (8,857,977 )   3,553,973  

Long term debt and capital lease obligations, less current portion

 

 

1,167,466

 

 

96,699

 

 

-

 

 

2,438,189

 

 

7,478,944

 

 

(3,434,378

)

 

7,746,920

 
Long term borrowings from related parties     -     3,359,606     -     2,092,818     6,940     (5,459,364 )   -  
Other liabilities     -     5,616     6,028     -     298,313     19,604     329,561  
Pension liabilities     -     10,377     254,233     -     171,248     -     435,858  
Income tax payable     2,287     30,846     -     -     20,262     123,538     176,933  
Deferred taxes     -     -     -     -     768,156     (24,766 )   743,390  
                               

Total liabilities

    1,199,523     5,835,624     950,398     6,340,890     16,293,543     (17,633,343 )   12,986,635  

Noncontrolling interests subject to put provisions

 

 

-

 

 

-

 

 

0

 

 

-

 

 

648,251

 

 

-

 

 

648,251

 
Redeemable Preferred Stock     -     -     -     235,141     (235,141 )   -     -  

Total FMC-AG & Co. KGaA shareholders' equity

 

 

69,569

 

 

9,234,564

 

 

787,519

 

 

7,651,017

 

 

13,432,374

 

 

(21,940,479

)

 

9,234,564

 
Noncontrolling interests not subject to put provisions     -     -     -     -     250,456     -     250,456  
                               
Total equity     69,569     9,234,564     787,519     7,651,017     13,682,830     (21,940,479 )   9,485,020  
                               

Total liabilities and equity

  $ 1,269,092   $ 15,070,188   $ 1,737,917   $ 14,227,048   $ 30,389,483   $ (39,573,822 ) $ 23,119,906  
                               
                               

(1) Other Assets and notes receivables are presented net of investment in equity method investees.

58


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA


Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 
  For the nine months ended September 30, 2014  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-
Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Operating Activities:                                            

Net income (loss)

  $ 3,317   $ 709,947   $ 246   $ 442,644   $ 890,463   $ (1,189,589 ) $ 857,028  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

                                           

Equity affiliate income

    -     (487,488 )   -     (570,440 )   -     1,057,928     -  

Depreciation and amortization

    -     482     40,739     -     499,294     (27,028 )   513,487  

Change in deferred taxes, net

    -     (18,882 )   (1,153 )   -     30,173     (8,481 )   1,657  

(Gain) loss on sale of fixed assets and investments

    -     -     32     -     3,241     -     3,273  

(Write Up) write-off loans from related parties

    -     53,928     -     -     -     (53,928 )   -  

Compensation expense related to stock options

    -     2,797     -     -     1,007     -     3,804  

Investments in equity method investees, net

    -     42,925     -     -     (17,732 )   -     25,193  

Changes in assets and liabilities, net of amounts from businesses acquired:

                                           

Trade accounts receivable, net

    -     -     (11,456 )   -     (90,977 )   286     (102,147 )

Inventories

    -     -     (280 )   -     (163,298 )   30,873     (132,705 )

Prepaid expenses and other current and non-current assets

    -     28,109     6,870     75,459     13,634     (6,115 )   117,957  

Accounts receivable from / payable to related parties

    19,617     (67,469 )   333,305     89,728     (435,110 )   78,100     18,171  

Accounts payable, accrued expenses and other current and non-current liabilities

    (17,938 )   26,608     65,322     253     (21,972 )   (627 )   51,646  

Income tax payable

    (1,688 )   (98,915 )   -     (83,262 )   84,714     15,607     (83,544 )
                               

Net cash provided by (used in) operating activities

    3,308     192,042     433,625     (45,618 )   793,437     (102,974 )   1,273,820  
                               
Investing Activities:                                            

Purchases of property, plant and equipment

    -     (47 )   (64,440 )   -     (611,646 )   29,762     (646,371 )

Proceeds from sale of property, plant and equipment

    -     -     232     -     7,400     -     7,632  

Disbursement of loans to related parties

    -     (263,141 )   -     (216,214 )   -     479,355     -  

Acquisitions and investments, net of cash acquired, and purchases of intangible assets

    -     (222,187 )   (11,793 )   -     (1,048,035 )   233,304     (1,048,711 )

Proceeds from divestitures

    -     -     -     -     3,661     -     3,661  
                               

Net cash provided by (used in) investing activities

    -     (485,375 )   (76,001 )   (216,214 )   (1,648,620 )   742,421     (1,683,789 )
                               
Financing Activities:                                            

Short-term borrowings, net

    -     309,671     (356,947 )   -     329,362     -     282,086  

Long-term debt and capital lease obligations, net

    (3,307 )   190,998     -     261,832     527,573     (479,355 )   497,741  

Increase (decrease) of accounts receivable securitization program

    -     -     -     -     (94,000 )   -     (94,000 )

Proceeds from exercise of stock options

    -     79,912     -     -     6,491     -     86,403  

Dividends paid

    -     (317,903 )   -     -     (232 )   232     (317,903 )

Capital increase (decrease)

    -     -     -     -     166,392     (166,392 )   -  

Distributions to noncontrolling interest

    -     -     -     -     (177,810 )   -     (177,810 )

Contributions from noncontrolling interest

    -     -     -     -     31,497     -     31,497  
                               

Net cash provided by (used in) financing activities

    (3,307 )   262,678     (356,947 )   261,832     789,273     (645,515 )   308,014  
                               
Effect of exchange rate changes on cash and cash equivalents     -     30,643     (441 )   -     (23,520 )   -     6,682  
                               
Cash and Cash Equivalents:                                            
Net increase (decrease) in cash and cash equivalents     1     (12 )   236     -     (89,430 )   (6,068 )   (95,273 )
Cash and cash equivalents at beginning of period     0     13     4,490     -     672,206     6,068     682,777  
                               
Cash and cash equivalents at end of period   $ 1   $ 1   $ 4,726   $ -   $ 582,776   $ -   $ 587,504  
                               
                               

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share data)

 

 
  For the nine months ended September 30, 2013  
 
  Issuer   Guarantors    
   
   
 
 
  FMC US
Finance
  FMC - AG &
Co. KGaA
  D-GmbH   FMCH   Non-
Guarantor
Subsidiaries
  Combining
Adjustment
  Combined
Total
 
Operating Activities:                                            

Net income (loss)

  $ 3,277   $ 760,997   $ (6,308 ) $ 515,161   $ 878,002   $ (1,287,642 ) $ 863,487  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

                                           

Equity affiliate income

    -     (547,834 )   -     (591,605 )   (2,319 )   1,141,758     -  

Depreciation and amortization

    -     512     38,203     -     465,002     (24,284 )   479,433  

Change in deferred taxes, net

    -     (27,091 )   1,372     -     32,461     (13,513 )   (6,771 )

(Gain) loss on sale of fixed assets and investments

    -     (12 )   (304 )   -     (6,086 )   -     (6,402 )

(Gain) loss on investments

    -     -     (66 )   -     -     66     -  

Compensation expense related to stock options

    -     18,484     -     -     -     -     18,484  

Cash inflow (outflow) from hedging

    -     (4,040 )   -     -     -     -     (4,040 )

Investments in equity method investees, net

    -     22,755     -     -     (11,965 )   -     10,790  

Changes in assets and liabilities, net of amounts from businesses acquired:

                                           

Trade accounts receivable, net

    -     -     17,616     -     (32,888 )   (198 )   (15,470 )

Inventories

    -     -     (3,210 )   -     (41,613 )   24,714     (20,109 )

Prepaid expenses and other current and non-current assets

    -     17,451     (18,106 )   (2,290 )   51,737     (1,061 )   47,731  

Accounts receivable from / payable to related parties

    19,612     (127,112 )   93,191     98,809     (202,653 )   101,988     (16,165 )

Accounts payable, accrued expenses and other current and non-current liabilities

    (17,939 )   14,143     37,724     6,531     41,288     (3,004 )   78,743  

Income tax payable

    1,147     20,440     -     (49,806 )   37,508     7,020     16,309  
                               

Net cash provided by (used in) operating activities

    6,097     148,693     160,112     (23,200 )   1,208,474     (54,156 )   1,446,020  
                               
Investing Activities:                                            

Purchases of property, plant and equipment

    -     (235 )   (56,354 )   -     (483,424 )   27,537     (512,476 )

Proceeds from sale of property, plant and equipment

    -     17     468     -     18,098     -     18,583  

Disbursement of loans to related parties

    -     487,243     -     165,814     -     (653,057 )   -  

Acquisitions and investments, net of cash acquired, and net purchases of intangible assets

    -     (32,060 )   (4,670 )   (1,000 )   (292,784 )   33,058     (297,456 )

Proceeds from divestitures

    -     -     -     -     17,984     -     17,984  
                               

Net cash provided by (used in) investing activities

    -     454,965     (60,556 )   164,814     (740,126 )   (592,462 )   (773,365 )
                               
Financing Activities:                                            

Short-term borrowings, net

    -     12,237     (96,214 )   -     94,366     -     10,389  

Long-term debt and capital lease obligations, net

    (6,062 )   83,515     -     1,557,474     (2,276,759 )   653,057     11,225  

Increase (decrease) of accounts receivable securitization program

    -     -     -     -     37,000     -     37,000  

Proceeds from exercise of stock options

    -     68,577     -     -     6,298     -     74,875  

Proceeds from conversion of preference shares into ordinary shares

    -     34,784     -     -     -     -     34,784  

Purchase of treasury stock

    -     (505,014 )   -     -     -     -     (505,014 )

Dividends paid

    -     (296,134 )   -     (684,229 )   681,368     2,861     (296,134 )

Capital increase (decrease)

    -     -     -     (1,014,859 )   1,025,162     (10,303 )   -  

Distributions to noncontrolling interest

    -     -     -     -     (162,239 )   -     (162,239 )

Contributions from noncontrolling interest

    -     -     -     -     52,357     -     52,357  
                               

Net cash provided by (used in) financing activities

    (6,062 )   (602,035 )   (96,214 )   (141,614 )   (542,447 )   645,615     (742,757 )
                               
Effect of exchange rate changes on cash and cash equivalents     -     (1,636 )   96     -     (14,243 )   -     (15,783 )
                               
Cash and Cash Equivalents:                                            
Net increase (decrease) in cash and cash equivalents     35     (13 )   3,438     -     (88,342 )   (1,003 )   (85,885 )
Cash and cash equivalents at beginning of period     1     78     501     -     686,457     1,003     688,040  
                               
Cash and cash equivalents at end of period   $ 36   $ 65   $ 3,939   $ -   $ 598,115   $ -   $ 602,155  
                               
                               

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Quantitative and Qualitative Disclosures About Market Risk

       During the period ended September 30, 2014, no material changes occurred to the information presented in Item 11 of the Company's Annual Report on Form 20-F for the year ended December 31, 2013, as amended.

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Controls and Procedures

       The Company is a "foreign private issuer" within the meaning of Rule 3b-4(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, the Company is not required to file quarterly reports with the Securities and Exchange Commission and is required to provide an evaluation of the effectiveness of its disclosure controls and procedures, to disclose significant changes in its internal control over financial reporting, and to provide certifications of its Chief Executive Officer and Chief Financial Officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 only in its Annual Report on Form 20-F. The Company furnishes quarterly financial information to the Securities and Exchange Commission (the "Commission") and such certifications under cover of Form 6-K on a voluntary basis and pursuant to the provisions of the Company's pooling agreement entered into for the benefit of the public holders of our shares. In connection with such voluntary reporting, the Company's management, including the Chief Executive Officer and the Chief Financial Officer of the Company's general partner, has conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report, of the type contemplated by Securities Exchange Act Rule 13a-15. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded in connection with the furnishing of this report, that the Company's disclosure controls and procedures are designed to ensure that the information the Company is required to disclose in the reports filed or furnished under the Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms and are effective to ensure that the information the Company is required to disclose in its reports is accumulated and communicated to the General Partner's Management Board, including the General Partner's Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. During the first six months of 2014, there have been no significant changes in internal controls, or in factors that could significantly affect internal controls.

       During the three-month period ended September 30, 2014, our Audit and Corporate Governance Committee continued its investigation, with the assistance of independent counsel, into allegations of conduct in our International segment that may violate the U.S. Foreign Corrupt Practices Act or other anti-bribery laws. For information with respect to that investigation, see Note 12 of the Notes to the Consolidated Financial Statements (unaudited), "Commitments and Contingencies — Legal and Regulatory Matters — Other Litigation and Potential Exposures," presented elsewhere in this Report. The Company's independent counsel, in conjunction with the Company's Compliance Department, have reviewed the Company's anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws, and appropriate enhancements are being implemented.

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OTHER INFORMATION

Legal and Regulatory Matters

       The information in Note 12 of the Notes to Consolidated Financial Statements (Unaudited), "Commitments and Contingencies" presented elsewhere in this report is incorporated by this reference.

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Exhibits

Exhibit No.
   

 

 

 
31.1   Certification of Chief Executive Officer and Chairman of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification of Chief Financial Officer and member of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Chief Executive Officer and Chairman of the Management Board of the Company's General Partner and Chief Financial Officer and member of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit accompanies this report as required by the Sarbanes-Oxley Act of 2002 and is not to be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended).

101

 

The following financial statements as of and for the nine-months period ended September 30, 2014 from FMC-AG & Co. KGaA's Report on Form 6-K for the month of November 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Shareholders' Equity and (vi) Notes to Consolidated Financial Statements.

10.1

 

Indenture dated as of October 29, 2014 by and among Fresenius Medical Care US Finance II, Inc., the Company and the other Guarantors party thereto and U.S. Bank National Association, as Trustee, related to the 4.125% Senior Notes due 2020 of Fresenius Medical Care US Finance II, Inc.

10.2

 

Form of Note Guarantee for 4.125% Senior Notes due 2020 (included in Exhibit 10.1).

10.3

 

Indenture dated as of October 29, 2014 by and among Fresenius Medical Care US Finance II, Inc., the Company and the other Guarantors party thereto and U.S. Bank National Association, as Trustee, related to the 4.75% Senior Notes due 2024 of Fresenius Medical Care US Finance II, Inc.

10.4

 

Form of Note Guarantee for 4.75% Senior Notes due 2024 (included in Exhibit 10.3).

10.5

 

Terms & Conditions (Euro-denominated) dated as of September 16, 2014 by and among Fresenius Medical Care AG & Co. KGaA, the Issuer, and Merrill Lynch International, Commerzbank Aktiengesellschaft, and Société Générale, as Joint Bookrunners, related to the 1.125% Equity-neutral Convertible Bonds due 2020 of Fresenius Medical AG & Co. KGaA.

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SIGNATURES

       Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

        DATE: November 4, 2014

       

 

FRESENIUS MEDICAL CARE AG & Co. KGaA
a partnership limited by shares, represented by:

 

FRESENIUS MEDICAL CARE MANAGEMENT AG,
its general partner

 

By:    /s/ RICE POWELL                                  

 

Name:

 

Rice Powell

  Title:   Chief Executive Officer and
Chairman of the Management Board of the
General Partner

 

By:    /s/ MICHAEL BROSNAN                                        

 

Name:

 

Michael Brosnan

  Title:   Chief Financial Officer and
member of the Management Board of the
General Partner

65




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Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Rice Powell, certify that:

1.
I have reviewed this report on Form 6-K of Fresenius Medical Care AG & Co. KGaA (the "Report").

2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:

a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d)
disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014   By:      /s/ RICE POWELL                    
Rice Powell
Chief Executive Officer and
Chairman of the Management Board of the
General Partner



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CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Brosnan, certify that:

1.
I have reviewed this report on Form 6-K of Fresenius Medical Care AG & Co. KGaA (the "Report");

2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:

a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d)
disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014   By:      /s/ MICHAEL BROSNAN    
Michael Brosnan
Chief Financial Officer and member of the
Management Board of the
General Partner



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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       In connection with the report of Fresenius Medical Care AG & Co. KGaA (the "Company") on Form 6-K furnished for the month of November 2014 containing its unaudited financial statements as of September 30, 2014 and for the nine-months periods ending September 30, 2014 & 2013, as submitted to the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Rice Powell, Chief Executive Officer and Michael Brosnan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

    By:      /s/ RICE POWELL                    
Rice Powell
Chief Executive Officer and
Chairman of the Management Board of the
General Partner

 

 

November 4, 2014

 

 

By:      /s/ MICHAEL BROSNAN    
Michael Brosnan
Chief Financial Officer and
member of the Management Board of the
General Partner

 

 

November 4, 2014



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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 10.1

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.
as Issuer

 

U.S. BANK NATIONAL ASSOCIATION
as Trustee

 

FRESENIUS MEDICAL CARE AG & Co. KGaA,

FRESENIUS MEDICAL CARE HOLDINGS, INC. and

FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH
as Guarantors

 

INDENTURE

 

DATED AS OF OCTOBER 29, 2014

 

with respect to the issuance of

 

$500,000,000 4.125% SENIOR NOTES DUE 2020

 

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1

Definitions

1

SECTION 1.2

Rules of Construction

21

SECTION 1.3

Incorporation by Reference of Trust Indenture Act

22

 

 

 

ARTICLE II

 

THE NOTES

 

 

 

SECTION 2.1

Form and Dating

22

SECTION 2.2

Execution and Authentication

23

SECTION 2.3

Registrar and Paying Agent

24

SECTION 2.4

Paying Agent To Hold Assets in Trust

25

SECTION 2.5

List of Holders

25

SECTION 2.6

Book-Entry Provisions for Global Notes

25

SECTION 2.7

Registration of Transfer and Exchange

26

SECTION 2.8

Replacement Notes

31

SECTION 2.9

Outstanding Notes

31

SECTION 2.10

Treasury Notes

32

SECTION 2.11

Temporary Notes

32

SECTION 2.12

Cancellation

32

SECTION 2.13

Defaulted Interest

33

SECTION 2.14

CUSIP Numbers

33

SECTION 2.15

Deposit of Moneys

33

SECTION 2.16

Certain Matters Relating to Global Notes

33

SECTION 2.17

Record Date

34

 

 

 

ARTICLE III

 

REDEMPTION

 

 

 

SECTION 3.1

Optional Redemption

34

SECTION 3.2

Notices to Trustee

34

SECTION 3.3

Selection of Notes To Be Redeemed

34

SECTION 3.4

Notice of Redemption

35

SECTION 3.5

Effect of Notice of Redemption

36

SECTION 3.6

Deposit of Redemption Price

36

SECTION 3.7

Notes Redeemed in Part

37

SECTION 3.8

Special Tax Redemption

37

 

i



 

 

 

Page

 

ARTICLE IV

 

COVENANTS

 

 

 

SECTION 4.1

Payment of Notes

38

SECTION 4.2

Maintenance of Office or Agency

38

SECTION 4.3

Limitation on Incurrence of Indebtedness

39

SECTION 4.4

Limitation on Liens

41

SECTION 4.5

Ownership of the Issuer

41

SECTION 4.6

Existence

41

SECTION 4.7

Maintenance of Properties

41

SECTION 4.8

Payment of Taxes and Other Claims

42

SECTION 4.9

Maintenance of Insurance

42

SECTION 4.10

Reports

42

SECTION 4.11

Change of Control

43

SECTION 4.12

Additional Amounts

45

SECTION 4.13

Compliance Certificate; Notice of Default

46

SECTION 4.14

Limitation on Sale and Leaseback Transactions

46

 

 

 

ARTICLE V

 

SUCCESSOR ISSUER OR GUARANTOR

 

 

 

SECTION 5.1

Limitation on Mergers and Sales of Assets

47

SECTION 5.2

Successor Entity Substituted

47

SECTION 5.3

Substitution of the Issuer

48

 

 

 

ARTICLE VI

 

DEFAULT AND REMEDIES

 

 

 

SECTION 6.1

Events of Default

49

SECTION 6.2

Acceleration

50

SECTION 6.3

Other Remedies

50

SECTION 6.4

The Trustee May Enforce Claims Without Possession of Notes

50

SECTION 6.5

Rights and Remedies Cumulative

51

SECTION 6.6

Delay or Omission Not Waiver

51

SECTION 6.7

Waiver of Past Defaults

51

SECTION 6.8

Control by Majority

51

SECTION 6.9

Limitation on Suits

52

SECTION 6.10

Rights of Holders To Receive Payment

52

SECTION 6.11

Collection Suit by Trustee

52

SECTION 6.12

Trustee May File Proofs of Claim

52

SECTION 6.13

Priorities

53

SECTION 6.14

Restoration of Rights and Remedies

53

SECTION 6.15

Undertaking for Costs

53

SECTION 6.16

Notices of Default

54

 

ii



 

 

 

Page

 

ARTICLE VII

 

TRUSTEE

 

 

 

SECTION 7.1

Duties of Trustee

54

SECTION 7.2

Rights of Trustee

55

SECTION 7.3

Individual Rights of Trustee

56

SECTION 7.4

Trustee’s Disclaimer

56

SECTION 7.5

Notice of Default

56

SECTION 7.6

Reports by Trustee to Holders of the Notes

57

SECTION 7.7

Compensation and Indemnity

57

SECTION 7.8

Replacement of Trustee

58

SECTION 7.9

Successor Trustee by Merger, Etc.

59

SECTION 7.10

Eligibility; Disqualification

59

SECTION 7.11

Preferential Collection of Claims Against the Company

60

 

 

 

ARTICLE VIII

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

 

 

SECTION 8.1

Option To Effect Legal Defeasance or Covenant Defeasance

60

SECTION 8.2

Legal Defeasance and Discharge

60

SECTION 8.3

Covenant Defeasance

61

SECTION 8.4

Conditions to Legal or Covenant Defeasance

61

SECTION 8.5

Satisfaction and Discharge of Indenture

62

SECTION 8.6

Survival of Certain Obligations

63

SECTION 8.7

Acknowledgment of Discharge by Trustee

63

SECTION 8.8

Application of Trust Moneys

63

SECTION 8.9

Repayment to the Issuer; Unclaimed Money

63

SECTION 8.10

Reinstatement

64

 

 

 

ARTICLE IX

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

 

 

SECTION 9.1

Without Consent of Holders of Notes

64

SECTION 9.2

With Consent of Holders of Notes

65

SECTION 9.3

Notice of Amendment, Supplement or Waiver

66

SECTION 9.4

Revocation and Effect of Consents

66

SECTION 9.5

Notation on or Exchange of Notes

67

SECTION 9.6

Trustee To Sign Amendments, Etc.

67

 

 

 

ARTICLE X

 

NOTE GUARANTEE

 

 

 

SECTION 10.1

Note Guarantee

67

 

iii



 

 

 

Page

 

SECTION 10.2

Execution and Delivery of Note Guarantees

70

SECTION 10.3

Guarantors May Consolidate, Etc., on Certain Terms

71

SECTION 10.4

Release of Guarantors

71

 

 

 

ARTICLE XI

 

MISCELLANEOUS

 

 

 

SECTION 11.1

Notices

72

SECTION 11.2

Certificate and Opinion as to Conditions Precedent

73

SECTION 11.3

Statements Required in Certificate or Opinion

74

SECTION 11.4

Rules by Trustee, Paying Agent, Registrar

75

SECTION 11.5

Legal Holidays

75

SECTION 11.6

Governing Law

75

SECTION 11.7

Submission to Jurisdiction

75

SECTION 11.8

No Personal Liability of Directors, Officers, Employees and Stockholders

76

SECTION 11.9

Successors

76

SECTION 11.10

Counterpart Originals

76

SECTION 11.11

Severability

76

SECTION 11.12

Table of Contents, Headings, Etc.

76

SECTION 11.13

Trust Indenture Act Controls

76

SECTION 11.14

Currency Indemnity

76

SECTION 11.15

Information

77

 

iv



 

EXHIBITS

 

Exhibit A

-

Form of Initial Global Note

Exhibit B

-

Form of Initial Definitive Note

Exhibit C

-

Form of Note Guarantee

Exhibit D

-

Form of Transfer Certificate for Transfer from Rule 144A Global Note to Regulation S Global Note

Exhibit E

-

Form of Transfer Certificate for Transfer from Regulation S Global Note to Rule 144A Global Note

 

NOTE:                   This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture.

 

v



 

INDENTURE dated as of October 29, 2014, among FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), as Issuer, FRESENIUS MEDICAL CARE AG & Co. KGaA, a partnership limited by shares (Kommanditgesellschaft auf Aktien) organized under the laws of the Federal Republic of Germany (the “Company”), FRESENIUS MEDICAL CARE HOLDINGS, INC., a New York corporation (“FMCH”) and FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH, a limited liability company organized under the laws of the Federal Republic of Germany (“FMCD” and, together with the Company and FMCH, the “Guarantors”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”).

 

The Issuer has duly authorized the creation and issuance of its 4.125% Senior Notes due 2020.  The Notes consist of (i) $500,000,000 aggregate principal amount of notes issued on the date hereof (the “Initial Notes”) and (ii) Additional Notes (as defined herein) that may be issued on any Issue Date (all such notes referred to in clauses (i) and (ii) being referred to as the “Notes”); and, to provide therefor, the Issuer has duly authorized the execution and delivery of this Indenture.  The Notes will be guaranteed (the “Note Guarantee”) on a senior unsecured basis by each Guarantor.  Each of the Issuer and the Guarantors has duly authorized the execution and delivery of this Indenture.  All things necessary to make the Notes, when duly issued and executed by the Issuer and authenticated and delivered by the Trustee hereunder, the valid obligations of the Issuer, and the Note Guarantee, when executed by each Guarantor and endorsed upon the Notes, the valid obligation of each Guarantor and to make this Indenture a valid agreement of the Issuer and each Guarantor, have been done.

 

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders:

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1                                                   Definitions .  As used in this Indenture, the following terms shall have the following meanings:

 

“Accounting Principles” means U.S. GAAP, or, upon adoption thereof by the Company and notice to the Trustee, IFRS or any other accounting standards which are generally acceptable in the jurisdiction of organization of the Company, approved by the relevant regulatory or other accounting bodies in that jurisdiction and internationally generally acceptable and, in the case of IFRS or such other accounting standards, as in effect from time to time.

 

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged into or consolidated with any other Person or that is assumed in connection with the acquisition of assets from such Person and, in each case, not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary or such merger, consolidation or acquisition.

 

“Additional Amounts” shall have the meaning set forth in Section 4.12 hereof.

 

“Additional Notes” means additional 4.125% Senior Notes due 2020.

 



 

“Additional Taxing Jurisdiction” shall have the meaning set forth in Section 4.12 hereof.

 

“Affiliate” of any specified Person means:

 

(1)                                  any other Person, directly or indirectly, controlling or controlled by, or

 

(2)                                  under direct or indirect common control with such specified Person.

 

For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agent” means the Paying Agent, any Registrar, Authenticating Agent or co-Registrar.

 

“Agent Members” shall have the meaning set forth in Section 2.16.

 

“A/R Facility” means the accounts receivable facility established pursuant to the Sixth Amended and Restated Transfer and Administration Agreement dated as of January 17, 2013 by and among NMC Funding Corporation, as transferor, National Medical Care, Inc., as initial collection agent, Liberty Street Funding LLC and the other conduit investors party thereto, the financial institutions party thereto, The Bank of Tokyo-Mitsubishi UFJ Ltd., New York Branch, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank, New York Branch, and Royal Bank of Canada, as administrative agents, and The Bank of Nova Scotia, as administrative agent and as agent (as amended, modified, renewed, refunded, replaced, restated or refinanced from time to time).

 

“Asset Disposition” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly Owned Subsidiary of the Company, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

 

(1)                                  any shares of Capital Stock of any Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Subsidiary),

 

(2)                                  all or substantially all the assets of any division or line of business of the Company or any Subsidiary, or

 

(3)                                  any other assets of the Company or any Subsidiary outside of the ordinary course of business of the Company or such Subsidiary,

 

other than, in the case of clauses (1), (2) and (3) above,

 

2



 

(A)                                a disposition of assets or issuance of Capital Stock by a Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned Subsidiary,

 

(B)                                transactions permitted under Section 5.1, and

 

(C)                                dispositions in connection with Permitted Liens, foreclosures on assets and any release of claims which have been written down or written off.

 

“Attributable Debt” means, in respect of any Sale and Leaseback Transaction, as of the time of determination, the total obligation (discounted to present value at the rate per annum equal to the discount rate which would be applicable to a Capital Lease Obligation with the like term in accordance with Accounting Principles) of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the initial term of the lease included in such Sale and Leaseback Transaction.

 

“Authenticating Agent” shall have the meaning set forth in Section 2.2.

 

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing:

 

(1)                                  the sum of the products of numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by,

 

(2)                                  the sum of all such payments.

 

“Bankruptcy Law” means (i) for purposes of the Company and FMCD organized under the laws of the Federal Republic of Germany, any bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application (including, without limitation, the German Insolvency Code (“ Insolvenzordnung ”) and (ii) for purposes of the Issuer and FMCH, or the Trustee, Title 11, United States Code or any similar federal, state or foreign law for the relief of debtors.

 

“Board of Directors” means, with respect to the Issuer or any Guarantor, as the case may be, the Board of Directors (or other body performing functions similar to any of those performed by a Board of Directors including those performed, in the case of a German stock corporation, by the management board or, in the case of a KGaA, by the General Partner) of such Person or any committee thereof duly authorized to act on behalf of such Board (or other body).

 

“Board Resolution” means, with respect to the Issuer or a Guarantor, a copy of a resolution certified by the Secretary or an Assistant Secretary or a member of the Board of Directors or Management Board of the Issuer or such Guarantor to have been duly adopted by the Board of Directors or the Management Board, or such committee of the Board of Directors or the Management Board or officers of the Issuer or such Guarantor to which authority to act on behalf of the Board of Directors or the Management Board has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee by the Issuer or the

 

3



 

Guarantor, as the case may be, and the Trustee shall be entitled to rely on such certification as conclusive evidence thereof.

 

“Business Day” means any day other than:

 

(1)                                  a Saturday or Sunday,

 

(2)                                  a day on which banking institutions in New York City, Frankfurt am Main or the jurisdiction of organization of the Issuer or of the office of a Paying Agent (other than the Trustee) are authorized or required by law or executive order to remain closed, or

 

(3)                                  a day on which the Corporate Trust Office of the Trustee is closed for business.

 

“Capital Lease Obligations” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with Accounting Principles, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with Accounting Principles; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.

 

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

 

“Cash Management Arrangements” means any cash management arrangement (including cash pool, virtual cash pool, treasury, depository, overdraft, credit or debit card, electronic funds transfer or other arrangements in respect of cash (including restricted cash) and cash equivalents or similar assets) of the Company and its Affiliates (including any Indebtedness arising thereunder) which arrangement is (i) in the ordinary course of business consistent with past practice, (ii) designed to provide cash management services, designed to enhance the rate of return of available cash and cash equivalents and entered into for investment and not speculative purposes as determined in good faith by the Company, or (iii) designed to reduce the overall tax liability of the Company and its Affiliates and for which the Company determines in good faith to be in compliance with tax laws applicable to it.

 

“Change of Control” means the occurrence of one or more of the following events:

 

(1)                                  so long as the Company is organized as a KGaA, if the General Partner of the Company charged with management of the Company shall at any time fail to be a Subsidiary of Fresenius SE, or if Fresenius SE shall fail at any time to own and control more than 25% of the capital stock with ordinary voting power in the Company;

 

4


 

(2)                                  if the Company is no longer organized as a KGaA, any event the result of which is that (A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Fresenius SE, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such Person or group shall be deemed to have “beneficial ownership” of all shares that any such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company and (B) Fresenius SE does not “beneficially own” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a greater percentage of the total voting power of the Voting Stock of the Company;

 

(3)                                  any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions herein).

 

“Change of Control Triggering Event” means the occurrence of a Change of Control and a Ratings Decline.

 

“Closing Date” means the date of this Indenture.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Company” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor.

 

“Consolidated Coverage Ratio” of any Person as of any date of determination means the ratio of (x) the aggregate amount of EBITDA for such Person’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such determination to (y) Consolidated Interest Expense for such four fiscal quarters; provided , however , that:

 

(1)                                  if such Person or any of its Subsidiaries has Incurred or repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness under any revolving credit facility unless such Indebtedness has been permanently repaid and any related commitment has been terminated) any Indebtedness since the beginning of such period that remains outstanding or discharged or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence or discharge of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred or discharged on the first day of such period and the Incurrence or discharge of any other Indebtedness as if such Incurrence or discharge had occurred on the first day of such period,

 

(2)                                  if since the beginning of such period such Person or any of its Subsidiaries shall have made any Asset Disposition, the EBITDA for such period shall be reduced by

 

5



 

an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of such Person or any of its Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect to such Person and its continuing Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Subsidiary is sold, the Consolidated Interest Expense for such period of credit and directly attributable to the Indebtedness of such Subsidiary to the extent such Person and its continuing Subsidiaries are no longer liable for such Indebtedness after such Asset Disposition),

 

(3)                                  if since the beginning of such period such Person or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary (or any Person which becomes a Subsidiary) or an acquisition of assets, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and

 

(4)                                  if since the beginning of such period any Person (that subsequently became a Subsidiary or was merged with or into such Person or any of its Subsidiaries since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by such Person or a Subsidiary of such Person during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Company, as applicable. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest of such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).

 

“Consolidated Interest Expense” means, with respect to any Person for any period, the total interest expense of such Person and its consolidated Subsidiaries, including the amortization of debt discount and premium, the interest component under capital leases and the implied interest component (if any) under any Receivables Financing, in each case on a consolidated basis determined in accordance with Accounting Principles.

 

“Consolidated Net Income” means, with respect to any Person for any period, the net income of such Person and its consolidated Subsidiaries (including, any net income attributable

 

6



 

to non-controlling interest of such Person and its consolidated Subsidiaries), in each case as determined on a consolidated basis in accordance with Accounting Principles; provided that extraordinary gains and losses shall be excluded from Consolidated Net Income.

 

“Corporate Trust Office” means the address of the Trustee specified in Section 11.1, or such other address as to which the Trustee may, from time to time, give written notice to the Company.

 

“Covenant Defeasance” shall have the meaning set forth in Section 8.3.

 

“Credit Facility” means the credit agreement entered into as of October 30, 2012 among, inter alios , the Company, FMCH, the other borrowers and guarantors identified therein, the lenders party thereto and Bank of America, N.A., as administrative agent, as amended, modified, renewed, refunded, replaced, restated or refinanced from time to time.

 

“Currency Agreement” means any foreign currency exchange contract, currency swap agreement or other similar agreement or arrangement.

 

“Custodian” means any receiver, trustee, assignee, liquidator, sequestration or similar official under any Bankruptcy Law.

 

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default (as defined herein).

 

“Default Interest Payment Date” shall have the meaning set forth in Section 2.13.

 

“Defeasance Trust” shall have the meaning set forth in Section 8.4.

 

“Definitive Notes” means Notes in definitive registered form substantially in the form of Exhibit B .

 

“Depositary” or “DTC” means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depositary by the Company, which Person must be a depositary registered under the Exchange Act.

 

“Designated Government Obligations” means direct non-callable and non-redeemable obligations (in each case, with respect to the issuer thereof) issued by any state that is, as of the Issue Date, a member of the European Union, or by the United States of America (including, in each case, any agency or instrumentality thereof), as the case may be, the payment of which is secured by the full faith and credit of the applicable member state or of the United States of America, as the case may be.

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

 

(1)                                  matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

 

7



 

(2)                                  is convertible or exchangeable for Indebtedness or Disqualified Stock; or

 

(3)                                  is redeemable at the option of the holder thereof, in whole or in part,

 

in each case on or prior to the first anniversary of the Stated Maturity of the Notes; provided , however , that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions of Section 4.11.

 

“EBITDA” for any Person for any period means the sum of Consolidated Net Income of such Person, plus Consolidated Interest Expense of such Person plus the following to the extent deducted in calculating such Consolidated Net Income:

 

(1)                                  all income tax expense of such Person and its Subsidiaries;

 

(2)                                  depreciation expense;

 

(3)                                  amortization expense; and

 

(4)                                  other non-cash charges (excluding (1) restructuring charges which do not initially involve a cash payment but as for which there will be a subsequent cash payment and (2) charges resulting from accruals of costs incurred in the ordinary course of business, other than those relating to pension liabilities), in each case for such period.

 

Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation, amortization and other non-cash charges of, a Subsidiary that is not a Wholly Owned Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Subsidiary or its stockholders.

 

“Event of Default” shall have the meaning set forth in Section 6.1.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Finance Subsidiary” means any Wholly Owned Subsidiary of the Company created for the sole purpose of issuing evidences of Indebtedness and which is subject to similar restrictions on its activities as the Issuer.

 

“Fitch” means Fitch, Inc. and its successors.

 

8



 

“FME EBITDA” means the EBITDA for the Company, provided that:

 

(1)                                  if since the beginning of such period the Company or any of its Subsidiaries shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative), directly attributable thereto for such period,

 

(2)                                  if since the beginning of such period the Company or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary (or any Person which becomes a Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Investment or acquisition occurred on the first day of such period, and

 

(3)                                  if since the beginning of such period the Company or any of its Subsidiaries (that subsequently became a Subsidiary or was merged with or into the Company or such Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (1) or (2) above if made by the Company or such Subsidiary during such period, EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.

 

For purposes of this definition (but not, for the avoidance of doubt, for the purpose of any other defined terms used in this definition), whenever pro forma effect is to be given to an acquisition of assets, or the amount of income or earnings relating thereto, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Company, as applicable.

 

“Fresenius SE” means Fresenius SE & Co. KGaA, a partnership limited by shares (Kommanditgesellschaft auf Aktien).

 

“General Partner” means Fresenius Medical Care Management AG, a German stock corporation, including its successors and assigns and other Persons, in each case who serve as the general partner ( persönlich haftender Gesellschafter ) of the Company from time to time.

 

“Global Notes” shall mean Notes in registered global form substantially in the form of Exhibit A .

 

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any Person (other than, in the case of subsidiaries, obligations which would not constitute Indebtedness) and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)                                  to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue

 

9



 

of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or

 

(2)                                  entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

 

provided , however , that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“Guarantee Agreement” means, in the context of a consolidation, merger or sale of all or substantially all of the assets of a Guarantor, an agreement by which the Surviving Person from such a transaction expressly assumes all of the obligations of such Guarantor under its Note Guarantee.

 

“Guarantor” means each of the Company, FMCH and FMCD and any successor or additional Guarantor, unless released from its obligations under its Note Guarantee in accordance with the terms of this Indenture.

 

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

 

“Holder” means a Person in whose name a Note is registered on the Registrar’s books.

 

“IFRS” means international financial reporting standards and interpretations issued by the International Accounting Standards Board and adopted by the European Commission, as in effect from time to time.

 

“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided , however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness.

 

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

 

(1)                                  the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable,

 

(2)                                  all Capital Lease Obligations of such Person,

 

10



 

(3)                                  all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (other than (x) customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business, (y) trade debt Incurred in the ordinary course of business and not overdue by 90 days or more and (z) obligations Incurred under a pension, retirement or deferred compensation program or arrangement regulated under the Employee Retirement Income Security Act of 1974, as amended, or the laws of a foreign government),

 

(4)                                  all obligations of such Person for the reimbursement of any obligor on any letter of credit, bank guarantee, banker’s acceptance or similar credit transaction (except to the extent such reimbursement obligation relates to trade debt in the ordinary course of business and such reimbursement obligation is paid within 30 days after payment of the trade debt),

 

(5)                                  the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends),

 

(6)                                  all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee,

 

(7)                                  all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured, and

 

(8)                                  to the extent not otherwise included in this definition, Hedging Obligations of such Person.

 

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. For the avoidance of doubt, the following will not be treated as Indebtedness:

 

(1)                                  Indebtedness Incurred in respect of workers’ compensation claims, self insurance obligations, performance, surety and similar bonds and completion guarantees provided in this ordinary course of business;

 

(2)                                  Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition or acquisition of any business, assets or Capital Stock of a Subsidiary, provided , that the maximum aggregate liability in respect of all such Indebtedness (other than in respect of tax and environmental indemnities) shall at no time

 

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exceed, in the case of a disposition, the gross proceeds actually received by the Company and its Subsidiaries in connection with such disposition and, in the case of an acquisition, the fair market value of any business assets or Capital Stock acquired;

 

(3)                                  Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five Business Days of the Incurrence.

 

“Indenture” means this Indenture, as amended, modified or supplemented from time to time in accordance with the terms hereof.

 

“Initial Notes” shall have the meaning set forth in the preamble to this Indenture.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement or other similar financial agreement or arrangement.

 

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person; provided , however , that advances, loans or other extensions of credit arising under the Cash Management Arrangements shall not be deemed Investments.

 

“Investment Grade” means a rating of (i) BBB- or higher by S&P, (ii) Baa3 or higher by Moody’s and (iii) BBB- or higher by Fitch, or the equivalent of such ratings by S&P, Moody’s or Fitch and the equivalent in respect of rating categories of any Rating Agencies substituted for S&P, Moody’s or Fitch.

 

“Investment Grade Status” exists as of any time if at such time any two of the following three are satisfied: (i) the rating assigned to the Notes by Moody’s is at least Baa3 (or the equivalent) or higher, (ii) the rating assigned to the Notes by S&P is at least BBB- (or the equivalent) or higher or (iii) the rating assigned to the Notes by Fitch is at least BBB- (or the equivalent) or higher, or in each case, the equivalent in respect of rating categories of any Rating Agencies substituted for S&P, Moody’s or Fitch.

 

“Issue Date” means the date on which any Notes are issued.

 

“Issuer” means Fresenius Medical Care US Finance II, Inc. until a successor replaces it pursuant to this Indenture and thereafter means such successor.

 

“Issuer Order” means a written order or request signed in the name of the Issuer by a Responsible Officer of the Issuer and delivered to the Trustee by the Issuer.

 

“KGaA” means a German partnership limited by shares ( Kommanditgesellschaft auf Aktien ).

 

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“Legal Defeasance” shall have the meaning set forth in Section 8.2.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

 

“Listing Agent” means BNP Paribas Securities Services, Luxembourg Branch.

 

“Luxembourg Paying Agent” shall have the meaning set forth in Section 2.3.

 

“Maturity Date” means October 15, 2020.

 

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

 

“Note Guarantee” means the Guarantee by a Guarantor of the Issuer’s obligations under the Notes.

 

“Notes” shall have the meaning set forth in the preamble of this Indenture.

 

“Offering Memorandum” means that certain Offering Memorandum dated October 24, 2014 relating to the Initial Notes and $400,000,000 aggregate principal amount of the Issuer’s 4.75% Senior Notes due 2024.

 

“Officers’ Certificate” means a certificate signed by two Responsible Officers of the Issuer or of any Guarantor.

 

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer, a Guarantor or the Trustee.

 

“Paying Agent” shall have the meaning set forth in Section 2.3.

 

“Permitted Liens” means, with respect to any Person:

 

(1)                                  pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or Designated Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

 

(2)                                  Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith if a reserve or other appropriate provisions, if any, as are required by Accounting Principles have been made in respect thereof;

 

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(3)                                  Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith provided appropriate reserves, if any, as are required by Accounting Principles have been made in respect thereof;

 

(4)                                  Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

 

(5)                                  encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

(6)                                  Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be, secured by a Lien on the same property securing such Hedging Obligation or Interest Rate Agreement;

 

(7)                                  leases, subleases and licenses of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries and leases, subleases and licenses of other assets in the ordinary course of business;

 

(8)                                  judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

(9)                                  Liens for the purpose of securing the payment (or the refinancing of the payment) of all or a part of the purchase price of, or Capital Lease Obligations with respect to, assets or property acquired or constructed in the ordinary course of business; provided , that:

 

(a)                                  the aggregate principal amount secured by such Liens does not exceed the cost of the assets or property so acquired or constructed; and

 

(b)                                  such Liens are created within 180 days of construction or acquisition of such assets or property (or, upon a refinancing, replace Liens created within such period) and do not encumber any other assets or property of the Company or any Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

 

(10)                           Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided , that such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depositary institution;

 

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(11)                           Liens arising from United States Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;

 

(12)                           Liens existing on the Closing Date (other than Liens under clause (19));

 

(13)                           Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided , however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Subsidiary;

 

(14)                           Liens on property at the time the Company or a Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Subsidiary; provided , however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further , however , that such Liens may not extend to any other property owned by the Company or any Subsidiary;

 

(15)                           Liens securing Indebtedness or other obligations of the Company to a Subsidiary or of a Subsidiary owing to the Company or a Subsidiary;

 

(16)                           Liens securing the Notes and all other Indebtedness which by its terms must be secured if the Notes are secured;

 

(17)                           Liens securing Indebtedness Incurred to refinance Indebtedness that was previously secured (other than Liens under clause (19)); provided , that such Lien is limited to all or part of the same property or assets that secured the Indebtedness refinanced;

 

(18)                           Liens arising by operation of law or by agreement to the same effect in the ordinary course of business;

 

(19)                           Liens securing (x) Indebtedness under the Credit Facility or (y) Indebtedness permitted to be incurred in accordance with Section 4.3(a) in an aggregate principal amount of Indebtedness under (x) and (y) secured thereby not to exceed the greater of (i) $6.0 billion and (ii) 2.5 times the FME EBITDA for the most recently ended four full fiscal quarters for which internal financial statements are available;

 

(20)                           Liens securing the A/R Facility;

 

(21)                           other Liens securing Indebtedness having an aggregate principal amount, measured as of the date of creation of any such Lien and the date of Incurrence of any such Indebtedness, not to exceed $1.5 billion at any one time outstanding; and

 

(22)                           Liens securing any Cash Management Arrangement.

 

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“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other entity.

 

“Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

 

“Private Placement Legend” means the legend set forth in Section 2.7(f).

 

“Qualified Capital Stock” means any Capital Stock which is not Disqualified Stock.

 

“Rating Agencies” means:

 

(1)                                  S&P,

 

(2)                                  Moody’s, and

 

(3)                                  Fitch, or

 

(4)                                  if S&P, Moody’s or Fitch or all three shall not make a rating of the Notes publicly available, despite the Company using its commercially reasonable efforts to obtain such a rating, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P, Moody’s, Fitch or all three, as the case may be.

 

“Rating Category” means:

 

(1)                                  with respect to S&P, any of the following categories:  BB, B, CCC, CC, C and D (or equivalent successor categories),

 

(2)                                  with respect to Moody’s, any of the following categories:  Ba, B, Caa, Ca, C and D (or equivalent successor categories),

 

(3)                                  with respect to Fitch, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories); and

 

(4)                                  the equivalent of any such category of S&P, Moody’s or Fitch used by another rating agency.  In determining whether the rating of the Notes has decreased by one or more gradations, gradations within rating categories (+ and - for S&P, 1, 2 and 3 for Moody’s, + and - for Fitch; or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, which constitute a decrease of one gradation).

 

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“Rating Date” means the date which is 90 days prior to the earlier of (1) a Change of Control and (2) public notice of the occurrence of a Change of Control or of the intention by the Company or any Person to effect a Change of Control.

 

“Ratings Decline” means the occurrence on or within 90 days after the date of the first public notice of either the occurrence of a Change of Control or of a transaction which will effect a Change of Control, whichever is earlier (which period shall be extended so long as any Rating Agency has publicly announced that it is considering a possible downgrade of the Notes) of (1) in the event the Notes are rated by at least two of the three Rating Agencies on the Rating Date as Investment Grade, a decrease in the rating of the Notes by two of the three Rating Agencies to a rating that is below Investment Grade, or (2) in the event that the Notes are rated below Investment Grade by at least two of the three Rating Agencies on the Rating Date, a decrease in the rating of the Notes by any one such Rating Agency by one or more gradations (including gradations within Rating Categories as well as between Rating Categories).

 

“Receivables Financings” means:

 

(1)                                  the A/R Facility, and

 

(2)                                  any financing transaction or series of financing transactions that have been or may be entered into by the Company or a Subsidiary pursuant to which the Company or a Subsidiary may sell, convey or otherwise transfer to a Subsidiary or Affiliate, or any other Person, or may grant a security interest in, any receivables or interests therein secured by the merchandise or services financed thereby (whether such receivables are then existing or arising in the future) of the Company or such Subsidiary, as the case may be, and any assets related thereto, including without limitation, all security interests in merchandise or services financed thereby, the proceeds of such receivables, and other assets which are customarily sold or in respect of which security interests are customarily granted in connection with securitization transactions involving such assets.

 

“Record Date” means the Record Dates specified in the Notes.

 

“Redemption Date” when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and Paragraph 8 of the Notes.

 

“Redemption Price” when used with respect to any Note to be redeemed, means the price fixed for such redemption pursuant to this Indenture and Paragraphs 8 and 9 of the Notes.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company or any Subsidiary existing on the Closing Date or Incurred in compliance with Section 4.3, including Indebtedness that Refinances Refinancing Indebtedness; provided , however , that:

 

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(1)                                  such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced,

 

(2)                                  such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced, and

 

(3)                                  such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; provided further , however , that Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that is not a Guarantor that Refinances Indebtedness of a Guarantor or (y) Indebtedness of a Guarantor that Refinances Indebtedness of a Subsidiary that is not a Guarantor.

 

“Registrar” shall have the meaning set forth in Section 2.3.

 

“Regulation S” means Regulation S (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

“Regulated Market of the Luxembourg Stock Exchange” means the regulated market of the Luxembourg Stock Exchange, a market appearing on the list of regulated markets issued by the European Community pursuant to Directive 2004/39EC of April 21, 2004 on markets in financial instruments.

 

“Regulation S Global Note” shall have the meaning set forth in Section 2.1.

 

“Regulation S Notes” shall have the meaning set forth in Section 2.1.

 

“Relevant Taxing Jurisdiction” shall have the meaning set forth in Paragraph 2 of the Notes.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, senior vice president—finance, treasurer, assistant treasurer, managing director, management board member or director of a company (or in the case of the Company, a Responsible Officer of its General Partner, other managing entity or other Person authorized to act on its behalf, and if such Person is also a partnership, limited liability company or similarly organized entity, a Responsible Officer of the entity that may be authorized to act on behalf of such Person).

 

“Restricted Period” shall have the meaning set forth in Section 2.7(b) hereof.

 

“Rule 144” means Rule 144 (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

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“Rule 144A” means Rule 144A (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

“Rule 144A Global Note” shall have the meaning set forth in Section 2.1 hereof.

 

“Rule 144A Notes” shall have the meaning set forth in Section 2.1 hereof.

 

“Sale and Leaseback Transaction” means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Issuer or any Guarantor or a Subsidiary of any property, whether owned by the Issuer, a Guarantor or any Subsidiary at the Closing Date or later acquired, which has been or is to be sold or transferred by the Issuer, a Guarantor or such Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property.

 

“SEC” means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Securities Act and the Exchange Act, then the body performing such duties at such time.

 

“Secured Indebtedness” means any Indebtedness of the Company secured by a Lien.

 

“Securities Act” means the U.S. Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

 

“Significant Subsidiary” means, with respect to any Person, any Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1.02 of Regulation S-X under the Exchange Act.

 

“S&P” means Standard & Poor’s Corporation and its successors.

 

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

 

“Subordinated Obligation” means any Indebtedness of the Issuer or a Guarantor (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes or such Guarantor’s Note Guarantee pursuant to a written agreement to that effect.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:

 

(1)                                  such Person;

 

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(2)                                  such Person and one or more Subsidiaries of such Person; or

 

(3)                                  one or more Subsidiaries of such Person.

 

Unless otherwise provided, all references to a Subsidiary shall be a Subsidiary of the Company.

 

“Successor” shall have the meaning set forth in Section 5.3.

 

“Surviving Person” means, with respect to any Person involved in any merger, consolidation or other business combination or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of such Person’s assets, the Person formed by or surviving such transaction or the Person to which such disposition is made.

 

“Tax Redemption Date” when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and Paragraph 9 of the Notes.

 

“Taxes” shall have the meaning set forth in Paragraph 2 of the Notes.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect on the date of this Indenture; provided , however , that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

“Treasury Rate” means, with respect to a Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H. 15(519) that has become publicly available at least two Business Days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Redemption Date to October 15, 2020; provided, however, that if the period from the Redemption Date to such date is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to such date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

“Trust Officer” means any officer of the Trustee (or any successor of the Trustee), including any director, managing director, vice president, assistant vice president, corporate trust officer, assistant corporate trust officer, associate or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at that time shall be such officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such trust matter is referred because of his or her knowledge of and familiarity with the particular subject.

 

“Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor.

 

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“U.S. GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in:

 

(1)                                  the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants,

 

(2)                                  statements and pronouncements of the Financial Accounting Standards Board,

 

(3)                                  such other statements by such other entity as approved by a significant segment of the accounting profession, and

 

(4)                                  the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

 

“Voting Stock” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

“Wholly Owned Subsidiary” means a Subsidiary all the Capital Stock of which (other than directors’ qualifying shares and shares held by other Persons to the extent such shares are required by applicable law to be held by a Person other than its parent or a Subsidiary of its parent) is owned by the Company or by one or more Wholly Owned Subsidiaries, or by the Company and one or more Wholly Owned Subsidiaries.

 

SECTION 1.2                                                   Rules of Construction .  Unless the context otherwise requires:

 

(a)                                  a term has the meaning assigned to it;

 

(b)                                  an accounting term not otherwise defined has the meaning assigned to it in accordance with Accounting Principles;

 

(c)                                   “or” is not exclusive;

 

(d)                                  words in the singular include the plural, and words in the plural include the singular;

 

(e)                                   provisions apply to successive events and transactions; and

 

(f)                                    “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

 

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SECTION 1.3                                                   Incorporation by Reference of Trust Indenture Act .

 

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in, and made a part of, this Indenture.

 

The following TIA terms have the following meanings:

 

“indenture securities” means the Notes and any Note Guarantee;

 

“indenture security holder” means a Holder;

 

“indenture to be qualified” means this Indenture;

 

“indenture trustee” or “institutional trustee” means the Trustee;

 

“obligor” on the Notes means the Issuer and any successor obligor upon the Notes or any Guarantor.

 

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by the Commission rule under the TIA have the meanings so assigned to them therein.

 

ARTICLE II

 

THE NOTES

 

SECTION 2.1                                                   Form and Dating .  The Notes and the notation relating to the Trustee’s certificate of authentication thereof, shall be substantially in the form of Exhibit A (in the case of Global Notes) and Exhibit B (in the case of the Definitive Notes), as applicable.  The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage.  The Issuer and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on them not inconsistent with the terms of this Indenture.  Each Note shall be dated the Issue Date and shall show the date of its authentication.

 

The terms and provisions contained in the Notes, annexed hereto as Exhibits A and B , shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Issuer, the Guarantors, the Trustee and the Paying Agent, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  The Notes will initially be represented by the Global Notes.  Definitive Notes will be issued in exchange for Global Notes only in accordance with Section 2.6(a).

 

As long as the Notes are in global form, the Paying Agent (in lieu of the Trustee) shall be responsible for:

 

(1)                                  paying sums due on the Global Notes; and

 

(2)                                  arranging on behalf of and at the expense of the Issuer for notices to be communicated to Holders in accordance with the terms of this Indenture.

 

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Each reference in this Indenture to the performance of duties set forth in clauses (1) and (2) above by the Trustee includes performance of such duties by the Paying Agent.

 

Notes offered and sold in their initial distribution in reliance on Regulation S shall be initially issued as one or more global notes, in registered, global form without interest coupons, substantially in the form of Exhibit A hereto, with such applicable legends as are provided in Section 2.7(f)(ii), except as otherwise permitted herein, and shall be referred to collectively herein as the “Regulation S Global Note.”  The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee (following receipt by the Trustee of all the information required hereunder), as hereinafter provided (or by the issue of a further Regulation S Global Note), in connection with a corresponding decrease or increase in the aggregate principal amount of the Rule 144A Global Note or in consequence of the issue of Definitive Notes or Additional Notes in the form of Regulation S Global Notes, as hereinafter provided.  The Regulation S Global Note and all other Notes that are not Rule 144A Notes shall collectively be referred to herein as the “Regulation S Notes.”

 

Notes offered and sold in their initial distribution in reliance on Rule 144A shall be initially issued as one or more global notes in registered, global form without interest coupons, substantially in the form of Exhibit A hereto, with such applicable legends as are provided in Section 2.7(f)(ii), except as otherwise permitted herein, and shall be referred to collectively herein as the “Rule 144A Global Note.”  The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee (following receipt by the Trustee of all information required hereunder), as hereinafter provided (or by the issue of a further Rule 144A Global Note), in connection with a corresponding decrease or increase in the aggregate principal amount of the Regulation S Global Note, or in consequence of the issue of Definitive Notes or Additional Rule 144A Global Notes, as hereinafter provided.  The Rule 144A Global Note and all other Notes (excluding interests in Rule 144A Global Notes which are transferred in accordance with Section 2.7(a) hereunder), if any, evidencing the debt, or any portion of the debt, initially evidenced by such Rule 144A Global Note, shall collectively be referred to herein as the “Rule 144A Notes.”

 

SECTION 2.2                                                   Execution and Authentication .  One Responsible Officer of or one Person duly authorized by all requisite corporate actions by the Issuer shall sign the Notes for the Issuer by manual or facsimile signature.

 

If a Responsible Officer whose signature is on a Note was a Responsible Officer at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.  The Trustee shall be entitled to rely on such signature as authentic and shall be under no obligation to make any investigation in relation thereto.

 

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note.  The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

 

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Except as otherwise provided herein, the aggregate principal amount of Notes which may be outstanding at any time under this Indenture is not limited in amount.  The Trustee shall authenticate such Notes, which shall consist of (i) Initial Notes for original issue on the Closing Date in an aggregate principal amount not to exceed $500,000,000 and (ii) Additional Notes from time to time for issuance after the Closing Date to the extent otherwise permitted hereunder (including, without limitation, under Section 4.3 hereof), in each case upon receipt of an Issuer Order.  Additional Notes will be treated the same as the Initial Notes for all purposes under this Indenture, including, without limitation, for purposes of waivers, amendments, redemptions and offers to purchase.  Such Issuer Order shall specify the aggregate principal amount of Notes to be authenticated, the type of Notes, the date on which the Notes are to be authenticated, the issue price and the date from which interest on such Notes shall accrue, whether the Notes are to be Initial Notes or Additional Notes and whether or not the Notes shall bear the Private Placement Legend, or such other information as the Trustee may reasonably request.  In authenticating the Notes and accepting the responsibilities under this Indenture in relation to the Notes, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel in a form reasonably satisfactory to the Trustee stating that the form and terms thereof have been established in conformity with the provisions of this Indenture, do not give rise to a Default and that the issuance of such Notes has been duly authorized by the Issuer.  Upon receipt of an Issuer Order, the Trustee shall authenticate Notes in substitution for Notes originally issued to reflect any name change of the Issuer.

 

The Trustee may appoint an authenticating agent (“Authenticating Agent”) reasonably acceptable to the Issuer to authenticate Notes.  Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent.  An Authenticating Agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer.

 

The Notes shall be issuable only in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

SECTION 2.3                                                   Registrar and Paying Agent .  The Issuer shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”), (ii) an office or agency where Notes may be presented for payment and (iii) upon issuance of Definitive Notes, an office or agency where Definitive Notes may be presented for payment to the Luxembourg Paying Agent.  The Registrar shall keep a register of the Notes and of their transfer and exchange.  At the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders.  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Issuer may change any Paying Agent or Registrar without notice to any Holder.  The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Issuer, the Company or any of its Subsidiaries may act as Paying Agent or Registrar to the extent permitted under applicable laws or regulations.

 

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The Issuer shall notify the Trustee and the Trustee shall notify the Holders of the name and address of any Agent not a party to this Indenture.  The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall incorporate the provisions of the TIA.  The agreement shall implement the provisions of this Indenture and the Notes that relate to such Agent.  The Issuer shall notify the Trustee of the name and address of any such Agent.  If the Issuer fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.7 hereof.

 

The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent.  If and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange so require, the Issuer shall appoint BNP Paribas Securities Services, or such other Person located in Luxembourg and reasonably acceptable to the Trustee (reasonableness to be determined objectively), as the Luxembourg paying and transfer agent (together with its successor in such capacity, the “Luxembourg Paying Agent”).

 

The Issuer initially appoints DTC to act as the Depositary with respect to the Global Notes.

 

SECTION 2.4                                                   Paying Agent To Hold Assets in Trust .  The Issuer shall require the Paying Agent to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, Additional Amounts, if any, premium, if any, or interest on, the Notes, and shall promptly notify the Trustee of any Default by the Issuer in making any such payment.  The Issuer at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets distributed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed.  Upon distribution to the Trustee of all assets that shall have been delivered by the Issuer to the Paying Agent pursuant to this Section 2.4, the Paying Agent shall have no further liability for such assets.

 

SECTION 2.5                                                   List of Holders .  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders.  If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee within two Business Days after each Record Date as of such Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of Holders, which list may be conclusively relied upon by the Trustee.

 

SECTION 2.6                                                   Book-Entry Provisions for Global Notes .  The Global Notes initially shall (i) be registered in the name of the DTC or its nominee, (ii) be delivered to the DTC or its custodian and (iii) bear the following legend:

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE

 

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DEPOSITORY TRUST COMPANY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE TO THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

(a)                                  Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the DTC to a nominee of the DTC or by a nominee of the DTC to the DTC or another successor of the DTC or a nominee of such successor.  Interests of beneficial owners in the Global Notes may be transferred or exchanged for Definitive Notes in accordance with the rules and procedures of the DTC and the provisions of Section 2.7.  All Global Notes shall be exchanged by the Issuer (with authentication by the Trustee) for one or more Definitive Notes, if (a) the DTC (i) has notified the Issuer that it is unwilling or unable to continue as Depositary and (ii) a successor to the DTC has not been appointed by the Issuer within 90 days of such notification, (b) the DTC so requests following an Event of Default hereunder or (c) in whole (but not in part) at any time if the Issuer in its sole discretion determines.  If an Event of Default occurs and is continuing, the Issuer shall, at the written request delivered through the DTC, exchange all or part of a Global Note for one or more Definitive Notes (with authentication by the Trustee); provided, however, that the principal amount of such Definitive Notes and such Global Note after such exchange shall be $2,000 or integral multiples of $1,000 in excess thereof.  Whenever all of a Global Note is exchanged for one or more Definitive Notes, it shall be surrendered by the Holder thereof to the Trustee for cancellation.  Whenever a part of a Global Note is exchanged for one or more Definitive Notes, the Global Note shall be surrendered by the Holder thereof to the Paying Agent who together with the Trustee, following such surrender, shall cause an adjustment to be made to Schedule A of such Global Note such that the principal amount of such Global Note will be equal to the portion of such Global Note not exchanged and shall thereafter return such Global Note to such Holder.  A Global Note may not be exchanged for a Definitive Note other than as provided in this Section 2.6(a).

 

(b)                                  In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to Section 2.6(a), the Global Notes shall be deemed to be surrendered to the Paying Agent for cancellation, and the Issuer shall execute, and the Trustee shall upon written instructions from the Issuer authenticate and make available for delivery, to each beneficial owner in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount of Definitive Notes of authorized denominations.

 

(c)                                   Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.6(a) shall, except as otherwise provided by Section 2.7, bear the Private Placement Legend.

 

SECTION 2.7                                                   Registration of Transfer and Exchange .  Notwithstanding any provision to the contrary herein, so long as a Note remains outstanding, transfers of beneficial interests in Global Notes or transfers of Definitive Notes, in whole or in part, shall be made only in accordance with this Section 2.7.

 

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(a)                                  If a holder of a beneficial interest in the Rule 144A Global Note wishes at any time to exchange its interest in such Rule 144A Global Note for an interest in the Regulation S Global Note, or to transfer its interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of an interest in such Regulation S Global Note, such holder may, subject to the rules and procedures of the DTC, to the extent applicable, and to the requirements set forth in this Section 2.7(a), exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in such Regulation S Global Note.  Such exchange or transfer shall only be made upon receipt by the Paying Agent, as transfer agent, at its Corporate Trust Office or, so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of that exchange so require, upon receipt by the Luxembourg Paying Agent, as transfer agent, at its office in Luxembourg of (1) written instructions given in accordance with the procedures of the DTC, to the extent applicable, from or on behalf of a holder of a beneficial interest in the Rule 144A Global Note directing the Paying Agent, as transfer agent, to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the Rule 144A Global Note to be exchanged or transferred, (2) a written order given in accordance with the procedures of the DTC, to the extent applicable, containing information regarding the account to be credited with such increase and the name of such account, and (3) a certificate in the form of Exhibit D given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S or Rule 144 under the Securities Act.  Upon such receipt, the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC, to reduce or reflect on its records a reduction of the Rule 144A Global Note by the aggregate principal amount of the beneficial interest in such Rule 144A Global Note to be so exchanged or transferred from the relevant participant, and the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Rule 144A Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions of a beneficial interest in such Regulation S Global Note equal to the reduction in the principal amount of such Rule 144A Global Note.

 

(b)                                  If a holder of a beneficial interest in the Regulation S Global Note wishes at any time to exchange its interest in such Regulation S Global Note for an interest in the Rule 144A Global Note, or to transfer its interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of an interest in such Rule 144A Global Note, such holder may, subject to the rules and procedures of the DTC, to the extent applicable, and to the requirements set forth in this Section 2.7(b), exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in such Rule 144A Global Note.  Such exchange or transfer shall only be made upon receipt by the Paying Agent, as transfer agent, at its Corporate Trust Office or, so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of that exchange so require, upon receipt by the Luxembourg Paying Agent, as transfer agent, at its office in Luxembourg of (l) instructions given in accordance with the procedures of the DTC, to the extent applicable, from or on behalf of a beneficial owner of an interest in the Regulation S Global Note directing the Paying Agent, as transfer agent, to credit or cause to be credited a beneficial interest in the Rule 144A Global Note in an

 

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amount equal to the beneficial interest in the Regulation S Global Note to be exchanged or transferred, (2) a written order given in accordance with the procedures of the DTC, to the extent applicable, containing information regarding the account to be credited with such increase and the name of such account, and (3) prior to or on the 40th day after the later of the commencement of the offering of the Notes and the relevant Issue Date (the “Restricted Period”), a certificate in the form of Exhibit E given by the holder of such beneficial interest and stating that the Person transferring such interest in such Regulation S Note reasonably believes that the Person acquiring such interest in such Rule 144A Note is a Qualified Institutional Buyer (as defined in Rule 144A) and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of the United States or any other jurisdiction.  Upon such receipt, the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC to reduce or reflect on its records a reduction of the Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be exchanged or transferred, and the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Rule 144A Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in such Rule 144A Global Note equal to the reduction in the principal amount of such Regulation S Global Note.  After the expiration of the Restricted Period, the certification requirement set forth in clause (3) of the second sentence of this Section 2.7(b) will no longer apply to such transfers.

 

(c)                                   Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.

 

(d)                                  In the event that a Global Note is exchanged for Definitive Notes in registered form without interest coupons, pursuant to Section 2.6(a), or a Definitive Note in registered form without interest coupons is exchanged for another such Definitive Note in registered form without interest coupons, or a Definitive Note is exchanged for a beneficial interest in a Global Note, such Notes may be exchanged or transferred for one another only in accordance with such procedures as are substantially consistent with the provisions of Sections 2.7(b) and (c) above (including the certification requirements intended to ensure that such exchanges or transfers comply with Rule 144, Rule 144A or Regulation S, as the case may be) and as may be from time to time adopted by the Issuer and the Trustee.

 

(e)                                   Prior to the expiration of the Restricted Period, beneficial interests in the Regulation S Global Note may only be exchanged or transferred in accordance with the certification requirements hereof.

 

(f)                                    (i)  Other than in the case of Notes issued pursuant to a registration statement which has been declared effective under the Securities Act, each Note issued hereunder shall, upon issuance, bear the legend set forth in clause (ii) below (the “Private Placement Legend”) and such legend shall not be removed from such Note except as provided in the next

 

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sentence.  The legend on a Note may be removed from a Note if there is delivered to the Issuer and the Trustee such satisfactory evidence, which may include an opinion of independent counsel licensed to practice law in the State of New York, as may be reasonably required by the Issuer and the Trustee, that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Note will not violate the registration requirements of the Securities Act, and the Issuer and the Trustee consent to such removal.  Upon provision of such satisfactory evidence, the Trustee, at the written direction of the Issuer, shall authenticate and deliver in exchange for such Note another Note or Notes having an equal aggregate principal amount that does not bear such legend.  If such a legend required for a Note has been removed from a Note as provided above, no other Note issued in exchange for all or any part of such Note shall bear such legend, unless the Issuer has reasonable cause to believe that such other Note is a “restricted security” within the meaning of Rule 144 and instructs the Trustee to cause a legend to appear thereon.

 

(ii)                                   To the extent required by paragraph (f)(i) above, the Notes shall bear the following legend on the face thereof:

 

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT

 

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HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.”

 

(g)                                   By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture.

 

Neither the Trustee nor the Paying Agent shall have any obligation or duty to monitor, and shall not be liable for any failure to, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Agent Members or beneficial owners of interest in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.6 or this Section 2.7.  The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

 

(h)                                  Definitive Notes shall be transferable only upon the surrender of a Definitive Note for registration of transfer.  When a Definitive Note is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements for such transfers are met.  When Definitive Notes are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Definitive Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.  When a Definitive Note is presented to the Registrar with a request to transfer in part, the transferor shall be entitled to receive without charge a Definitive Note representing the balance of such Definitive Note not transferred.  To permit registration of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Definitive Notes at the Registrar’s or co-registrar’s request.

 

(i)                                      The Issuer shall not be required to make, and the Registrar need not register transfers or exchanges of, Definitive Notes (i) for a period of 15 calendar days prior to any date fixed for the redemption of the Notes, (ii) for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to be redeemed in part, (iii) for a payment period of 15 calendar days prior to any Record Date, or (iv) that the registered Holder of Notes has tendered (and not withdrawn) for repurchase in connection with a Change of Control.

 

(j)                                     Prior to the due presentation for registration of transfer of any Definitive Note, the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the Person in whose name a Definitive Note is registered as the absolute

 

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owner of such Definitive Note for the purpose of receiving payment of principal, interest or Additional Amounts, if any, on such Definitive Note and for all other purposes whatsoever, whether or not such Definitive Note is overdue, and none of the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary.

 

(k)                                  The Issuer may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section 2.7.

 

(l)                                      All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

 

(m)                              Holders of Notes (or holders of interests therein) initially offered or sold in the United States to “Qualified Institutional Buyers” as defined in Rule 144A under the Securities Act pursuant to such rule and prospective purchasers designated by such Holders (or holders of interests therein) will have the right to obtain from the Issuer upon request by such Holders (or holders of interests therein) or prospective purchasers, during any period in which the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, or not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the information required by paragraph d(4)(i) of Rule 144A in connection with any transfer or proposed transfer of such Notes.

 

SECTION 2.8                                                   Replacement Notes .  If a mutilated Definitive Note is surrendered to the Registrar, if a mutilated Global Note is surrendered to the Issuer or if the Holder of a Note claims that such Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note in such form as the Note being replaced in the manner specified in this Section 2.8.  If required by the Trustee, the Registrar or the Issuer, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of the Issuer, the Registrar and the Trustee, to protect the Issuer, the Registrar, the Trustee and any Agent from any loss which any of them may suffer if a Note is replaced.  The Issuer may charge such Holder for its reasonable out of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel.  Every replacement Note is an additional obligation of the Issuer.  The provisions of this Section 2.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost, stolen or taken Notes.

 

SECTION 2.9                                                   Outstanding Notes .  Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those canceled by it, those delivered to it for cancellation, those reductions in the Global Note effected in accordance with the provisions hereof and those described in this Section 2.9 as not outstanding.  Subject to Section 2.10, a Note does not cease to be outstanding because the Issuer or any of its Affiliates holds the Note.

 

If a Note is replaced pursuant to Section 2.8 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it, and upon which it shall be entitled to rely in accordance with Section 7.1(a), that the replaced Note is held by a bona fide purchaser.  A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.8.

 

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If the principal amount of any Note is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest and Additional Amounts, if any, on it cease to accrue.

 

If on a Redemption Date or the Maturity Date the Paying Agent holds cash sufficient to pay all of the principal and interest due on the Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest and Additional Amounts, if any, on such Notes cease to accrue.

 

SECTION 2.10                                            Treasury Notes .  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, the Guarantors or any of their Affiliates shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trust Officer actually knows are so owned shall be disregarded and the Trustee assumes no liability in relation to any other Notes.

 

The Issuer shall notify the Trustee, in writing, when it or any Guarantor or any of their Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired.  The Trustee may require an Officers’ Certificate, which shall promptly be provided upon receipt by the appropriate Responsible Officers of the requisite information, listing Notes owned by the Issuer, the Guarantors a Subsidiary of the Issuer or the Guarantors or an Affiliate of the Issuer or the Guarantors.

 

SECTION 2.11                                            Temporary Notes .  Until permanent Definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Definitive Notes upon receipt of an Issuer Order pursuant to Section 2.2.  The Officers’ Certificate shall specify the amount of temporary Definitive Notes to be authenticated and the date on which the temporary Definitive Notes are to be authenticated.  Temporary Definitive Notes shall be substantially in the form of permanent Definitive Notes but may have variations that the Issuer considers appropriate for temporary Definitive Notes.  Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate upon receipt of an Issuer Order pursuant to Section 2.2 permanent Definitive Notes in exchange for temporary Definitive Notes.

 

SECTION 2.12                                            Cancellation .  The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall promptly forward to the Trustee any Notes surrendered to them for transfer, exchange or payment.  The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, at the written direction of the Issuer, shall dispose of (subject to the record retention requirements of the Exchange Act) all Notes surrendered for transfer, exchange, payment or cancellation.  Upon completion of any disposal, the Trustee shall deliver a certificate of such disposal to the Issuer, unless the Issuer directs the Trustee in writing to deliver the cancelled Notes to the Issuer or the Company.  Subject to Section 2.8, the Issuer may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation.  If the Issuer shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.12.

 

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SECTION 2.13                                            Defaulted Interest .  If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Holder thereof on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Issuer for the payment of defaulted interest.  The Issuer shall promptly notify the Trustee and Paying Agent in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment (a “Default Interest Payment Date”), and at the same time the Issuer shall deposit with the Trustee or Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee or Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as in this Section 2.13; provided , however , that in no event shall the Issuer deposit monies proposed to be paid in respect of defaulted interest later than 10:00 a.m. New York City time on the proposed Default Interest Payment Date with respect to defaulted interest to be paid on the Note.  At least 15 days before the subsequent special record date, the Issuer shall mail to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid.

 

SECTION 2.14                                            CUSIP Numbers .  The Issuer in issuing the Notes may use “CUSIP” numbers, and if it does so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes.  The Issuer shall promptly notify the Trustee of any change in the CUSIP numbers.

 

SECTION 2.15                                            Deposit of Moneys .  Prior to 10:00 a.m. New York City time on each interest payment date and Maturity Date, the Issuer shall have deposited with the Trustee or its designated Paying Agent (which shall be the Paying Agent or its successor unless otherwise notified to the Issuer by the Trustee) in immediately available funds money sufficient to make cash payments, if any, due on such interest payment date or Maturity Date, as the case may be, on all Notes then outstanding.  Such payments shall be made by the Issuer in a timely manner which permits the Paying Agent to remit payment to the Holders on such interest payment date or Maturity Date, as the case may be.  Promptly upon receipt of such payment, the Paying Agent shall confirm by the medium chosen by the Paying Agent to the Issuer the receipt of such payment.

 

SECTION 2.16                                            Certain Matters Relating to Global Notes .  Members of or participants in the DTC (“Agent Members”) shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the DTC or its nominee, and the DTC or its nominee may be treated by the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar and any agent of the Issuer or the Guarantors as the absolute owner of the Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Guarantors, the Trustee or any agent of the Issuer or the Guarantors from giving effect to any written certification, proxy or other authorization furnished by the DTC or its

 

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nominee or impair, as between the DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 

(a)                                  The Holder of any Global Note may grant proxies and otherwise authorize any Person, including DTC and its Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

SECTION 2.17                                            Record Date .  Unless otherwise set forth in this Indenture, the record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA § 316(c).

 

ARTICLE III

 

REDEMPTION

 

SECTION 3.1                                                   Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)                                  as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)                                  100% of the principal amount of the Notes being redeemed.

 

The Company shall certify to the Trustee the applicable Treasury Rate at the time of any such redemption.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2020 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

SECTION 3.2                                                   Notices to Trustee .  If the Issuer elects to redeem Notes pursuant to Paragraphs 8 or 9 of such Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of Notes to be redeemed at least 15 days prior to the giving of the notice contemplated by Section 3.4 (or such shorter period as the Trustee in its sole discretion shall determine).  The Issuer shall give notice of redemption as required under the relevant paragraph of the Notes pursuant to which such Notes are being redeemed.

 

SECTION 3.3                                                   Selection of Notes To Be Redeemed .  In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements

 

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of the principal securities exchange, if any, on which such Notes are listed, and/or in compliance with the requirements of the DTC, or if such Notes are not listed, on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate (and in such manner as complies with applicable legal and exchange requirements); although no Note of $2,000 in original principal amount or less shall be redeemed in part.  If any Note is to be redeemed in part only, notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.  The selections made by the Trustee pursuant to this Section 3.3 shall always be subject to Section 7.2(d).

 

SECTION 3.4                                                   Notice of Redemption .  At least 30 days but not more than 60 days before a Redemption Date or a Tax Redemption Date, as applicable, the Issuer shall, so long as the Notes are in global form, publish a redemption notice in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, publish in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort ) or, to the extent and in the manner permitted by such rules, post such notice on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable, or in the case of Definitive Notes, in addition to such publication, mail such notice to Holders (with a copy to the Trustee) by first-class mail, postage prepaid, at their respective addresses as they appear on the registration books of the Registrar.  At the Issuer’s request made at least 45 days before the Redemption Date or a Tax Redemption Date, as applicable (or such shorter period as the Trustee in its sole discretion shall determine), the Paying Agent shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense; provided , however , that the Issuer shall deliver to the Trustee (in advance) an Officers’ Certificate requesting that the Trustee give such notice and setting forth in full the information to be stated in such notice as provided in the following items.  Each notice for redemption shall identify the Notes to be redeemed and shall state:

 

(a)                                  the Redemption Date or the Tax Redemption Date, as applicable;

 

(b)                                  the Redemption Prices and the amount of accrued and unpaid interest, if any, and Additional Amounts, if any, to be paid (subject to the right of Holders of record on the relevant Record Date to receive interest and Additional Amounts, if any, due on the relevant interest payment date);

 

(c)                                   the name and address of the designated Paying Agent;

 

(d)                                  that Notes called for redemption must be surrendered to the designated Paying Agent to collect the Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any;

 

(e)                                   that, unless the Issuer defaults in making the redemption payment pursuant to the terms of this Indenture, interest and Additional Amounts, if any, on Notes called for

 

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redemption cease to accrue on and after the Redemption Date or the Tax Redemption Date, as applicable, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Notes redeemed;

 

(f)                                    (i) if any Global Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, interest and Additional Amounts, if any, shall cease to accrue on the portion called for redemption, and upon surrender of such Global Note (if applicable), the Global Note with a notation on Schedule A thereof adjusting the principal amount thereof to be equal to the unredeemed portion, will be returned and (ii) if any Definitive Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed, and that, after the Redemption Date, upon surrender of such Definitive Note, a new Definitive Note or Notes in aggregate principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof, upon cancellation of the original Note;

 

(g)                                   if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption;

 

(h)                                  the paragraph of the Notes pursuant to which the Notes are to be redeemed; and

 

(i)                                      the CUSIP numbers, and that no representation is made as to the correctness or accuracy of the CUSIP numbers, if any, listed in such notice or printed on the Notes.

 

Prior to the giving of any notice of redemption pursuant to Paragraph 9 of the Notes, the Issuer will deliver to the Trustee (a) an Officers’ Certificate of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (b) an Opinion of Counsel qualified under the laws of the relevant jurisdiction to the effect that the Issuer has or will become obligated to pay such Additional Amounts as a result of a change in tax law, and that the Issuer cannot avoid such obligation by taking reasonable measures available to it.

 

SECTION 3.5                                                   Effect of Notice of Redemption .  Once notice of redemption is given in accordance with Section 3.4, Notes called for redemption become due and payable on the Redemption Date or the Tax Redemption Date, as applicable, and at the Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any.  Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued and unpaid interest thereon, if any, and Additional Amounts, if any, to the Redemption Date or Tax Redemption Date, as applicable), but installments of interest, the maturity of which is on or prior to the Redemption Date or the Tax Redemption Date, as applicable, shall be payable to Holders of record at the close of business on the relevant Record Dates.

 

SECTION 3.6                                                   Deposit of Redemption Price .  Prior to 10:00 a.m. New York City time on the Redemption Date or the Tax Redemption Date, as applicable, the Issuer shall deposit with the Trustee or its designated Paying Agent (which shall be the Paying Agent or its

 

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successor unless otherwise notified to the Issuer by the Trustee) cash sufficient to pay the Redemption Price plus accrued and unpaid interest (subject to, as provided in the Notes, the right of Holders to receive interest on the relevant interest payment date), if any, and Additional Amounts, if any, of all Notes to be redeemed on that date other than Notes or portion of Notes called for redemption that have been delivered by the Issuer to the Trustee for cancellation.  The designated Paying Agent shall promptly return to the Issuer any cash so deposited which is not required for that purpose upon the written request of the Issuer.  Promptly upon receipt of such payment the Paying Agent shall confirm by the medium chosen by the Paying Agent to the Issuer the receipt of such payment.

 

If the Issuer complies with the preceding paragraph, then, unless the Issuer defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any, interest and Additional Amounts on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date or Tax Redemption Date, whether or not such Notes are presented for payment.  With respect to Definitive Notes, if a Definitive Note is redeemed on or after an interest Record Date but on or prior to the related interest payment date, then any accrued and unpaid interest, if any, and Additional Amounts, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date.  If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuer to comply with the preceding paragraph, interest, and Additional Amounts, if any, shall be paid on the unpaid principal, from the Redemption Date or the Tax Redemption Date, as applicable, until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.1.

 

SECTION 3.7                                                   Notes Redeemed in Part .  Upon surrender and cancellation of a Definitive Note that is redeemed in part, the Issuer shall execute and the Trustee shall authenticate for the Holder (at the Issuer’s expense) a new Definitive Note equal in principal amount to the unredeemed portion of the Definitive Note surrendered and canceled; provided , however , that each such Definitive Note shall be in a principal amount at maturity of $2,000 or integral multiples of $1,000 in excess thereof.  Upon surrender of a Global Note that is redeemed in part, the Paying Agent shall promptly forward such Global Note to the Trustee who shall make a notation on Schedule A thereof to reduce the principal amount of such Global Note to an amount equal to the unredeemed portion of the Global Note surrendered; provided , however , that each such Global Note shall be in a principal amount at maturity of $2,000 or integral multiples of $1,000 in excess thereof.

 

SECTION 3.8                                                   Special Tax Redemption .  The Issuer will be entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

(a)                                  a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

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(b)                                  any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes; provided , that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.1                                                   Payment of Notes .

 

(a)                                  The Issuer shall pay the principal, premium, if any, interest and Additional Amounts, if any, on the Notes in the manner provided in such Notes and this Indenture.  An installment of principal of or interest, premium or Additional Amounts on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent holds prior to 10:00 a.m. New York City time on that date money deposited by the Issuer in immediately available funds and designated for, and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture.

 

(b)                                  The Issuer shall pay, to the extent such payments are lawful, interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and on overdue installments of interest (without regard to any applicable grace periods), on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

SECTION 4.2                                                   Maintenance of Office or Agency .  The Issuer shall maintain the office or agency (which office may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) required under Section 2.3 where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.1.  The Issuer hereby initially designates the office of the Trustee, acting through its office at 100 Wall Street, Suite 1600, New York, New York 10005, as its office or agency as required under Section 2.3 hereof.  If the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such exchange so require, the Issuer will appoint BNP Paribas Securities Services, or such other Person located in

 

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Luxembourg and reasonably acceptable to the Trustee (reasonableness to be determined objectively), as an additional paying and transfer agent.

 

SECTION 4.3                                                   Limitation on Incurrence of Indebtedness .

 

(a)                                  The Issuer and the Company shall not, and shall not permit any of their Subsidiaries to, Incur, directly or indirectly, any Indebtedness; provided , however, that the Company and any Subsidiary may Incur Indebtedness (and the Company and any Subsidiary may Incur Acquired Indebtedness) if on the date thereof:

 

(1)                                  the Consolidated Coverage Ratio of the Company is at least 2.0 to 1.0; and

 

(2)                                  no Default or Event of Default will have occurred and be continuing or would occur as a consequence of Incurring the Indebtedness.

 

(b)                                  The foregoing limitations contained in paragraph (a) do not apply to the Incurrence of any of the following Indebtedness:

 

(1)                                  Indebtedness Incurred as revolving credit facilities under the Credit Facility in an aggregate amount not to exceed $1.7 billion outstanding at any time;

 

(2)                                  Indebtedness in respect of Receivables Financings in an aggregate principal amount which, together with all other Indebtedness in respect of Receivables Financings outstanding on the date of such Incurrence (other than Indebtedness permitted by paragraph (a) or clause (3) of this paragraph (b)), does not exceed 85% of the sum of (1) the total amount of accounts receivables shown on the Company’s most recent consolidated quarterly balance sheet, plus (2) without duplication, the total amount of accounts receivable already subject to a Receivables Financing;

 

(3)                                  Indebtedness of the Company owed to and held by another Guarantor, Indebtedness of a Wholly Owned Subsidiary owed to and held by another Wholly Owned Subsidiary or Indebtedness of a Wholly Owned Subsidiary owing to and held by the Company; provided , however , that any subsequent issuance or transfer of any Capital Stock that results in any such Indebtedness being held by a Person other than the Company or another Wholly Owned Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or another Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the Company or the Subsidiary, as the case may be;

 

(4)                                  Indebtedness in respect of the Notes issued on the Closing Date, the related Note Guarantees by the Company and the other Guarantors, Indebtedness in respect of the Issuer’s 4.75% Senior Notes due 2024 issued on the Closing Date, and the related Guarantees of the 4.75% Senior Notes due 2024 by the Company and the other Guarantors;

 

(5)                                  Capital Lease Obligations and Indebtedness Incurred, in each case, to provide all or a portion of the purchase price or cost of construction of an asset or, in the case

 

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of a Sale and Leaseback Transaction, to finance the value of such asset owned by the Company or a Subsidiary;

 

(6)                                  Indebtedness (other than Indebtedness of the type covered by clause (1) or clause (2)) outstanding on the Closing Date after giving effect to the application of proceeds from the Notes;

 

(7)                                  Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (4) or (6) of this paragraph (b);

 

(8)                                  Hedging Obligations entered into in the ordinary course of the business and not for speculative purposes as determined in good faith by the Company;

 

(9)                                  customer deposits and advance payments received from customers for goods purchased in the ordinary course of business;

 

(10)                           Indebtedness arising under the Cash Management Arrangements; and

 

(11)                           Indebtedness Incurred by the Company or a Subsidiary in an aggregate principal amount which, together with all other Indebtedness of the Company and its Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by paragraph (a) or clauses (1) through (10) of this paragraph (b)), does not exceed $1.5 billion.

 

(c)                                   For purposes of determining compliance with the foregoing covenant:

 

(1)                                  in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify and from time to time may reclassify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the above clauses, provided that any Indebtedness outstanding on the Closing Date and Indebtedness Incurred under clause (b)(5) above may not be reclassified to clause (a) above; and

 

(2)                                  an item of Indebtedness may be divided and classified, or reclassified, in more than one of the types of Indebtedness described above, provided that any Indebtedness outstanding on the Closing Date and Indebtedness Incurred under clause (b)(5) above may not be reclassified to clause (a) above.

 

(d)                                  If during any period the Notes have achieved and continue to maintain Investment Grade Status and no Event of Default has occurred and is continuing (such period is referred to herein as an “Investment Grade Status Period”), then upon notice by the Company to the Trustee by the delivery of an Officers’ Certificate that it has achieved Investment Grade Status, this covenant will be suspended and will not during such period be applicable to the Company and its Subsidiaries and shall only again be applicable if such Investment Grade Status Period ends.

 

No action taken during an Investment Grade Status Period or prior to an Investment Grade Status Period in compliance with this Section 4.3 will require reversal or constitute a

 

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default under the Notes in the event that this Section 4.3 is subsequently reinstated or suspended, as the case may be.

 

SECTION 4.4                                                   Limitation on Liens .  The Issuer and the Company may not, and may not permit any Guarantor or any of their respective Subsidiaries to directly, or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock), whether owned on the date hereof or acquired after that date, securing any Indebtedness, unless contemporaneously with (or prior to) the Incurrence of the Liens effective provision is made to secure the Indebtedness due under this Indenture and the Notes, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

 

SECTION 4.5                                                   Ownership of the Issuer .  The Company will continue to directly or indirectly maintain 100% ownership of the Capital Stock of the Issuer or any permitted successor of the Issuer, provided , that any permitted successor of the Company may succeed to the Company’s ownership of such Capital Stock.

 

The Company will cause the Issuer or its successor to engage only in those activities that are necessary, convenient or incidental to issuing and selling the Notes and any additional Indebtedness permitted under Section 4.3 (including the Issuer’s Guarantee of the Credit Facility and any Additional Notes), and advancing or distributing the proceeds thereof to the Company and its Subsidiaries and performing its obligations relating to the Notes and any such additional Indebtedness, pursuant to the terms thereof and of this Indenture and any other applicable indenture.

 

SECTION 4.6                                                   Existence .  Except as permitted by Article V, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the existence, rights (charter and statutory) and franchises of the Company, the Issuer and each other Guarantor; provided , however , that the Company shall not be required to preserve any such existence, right or franchise if the Board of Directors of the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof at the time of such loss is not disadvantageous in any material respect to the Holders.

 

SECTION 4.7                                                   Maintenance of Properties .  Except as permitted by Article V, the Company shall cause all properties used or useful in the conduct of its business or the business of any Subsidiary of the Company to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, as determined by the Company, or its Responsible Officers, or any Subsidiary, or its Responsible Officers, having managerial responsibility for any such property, in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

 

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SECTION 4.8                                                   Payment of Taxes and Other Claims .  The Company and the Guarantors will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries or upon the income, profits or property of the Company or any of its Subsidiaries (including satisfying any withholding tax obligations), and (b) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the property of the Company or the Guarantors or any of their Subsidiaries; provided, however, that the Company or the Guarantors shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves are maintained in accordance with Accounting Principles.

 

SECTION 4.9                                                   Maintenance of Insurance .  The Company shall, and shall cause its Subsidiaries to, keep at all times all of their material properties which are of an insurable nature insured against loss or damage pursuant to self-insurance arrangements with insurers believed by the Company to be responsible to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in accordance with good business practice.  The Company shall, and shall cause its Subsidiaries to, use the proceeds from any such insurance policy to repair, replace or otherwise restore the property to which such proceeds relate, except to the extent that a different use of such proceeds is, as determined by the Company, or any Subsidiary having managerial responsibility for any such property, in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

 

SECTION 4.10                                            Reports .  For so long as any Notes are outstanding, the Company will provide the Trustee with:

 

(1)                                  copies of the annual reports and of the information, documents and other reports, and such summaries thereof, as may be required by the TIA at the times and in the manner provided by the TIA;

 

(2)                                  its annual financial statements and related notes thereto for the most recent two fiscal years prepared in accordance with U.S. GAAP (or IFRS or any other internationally generally acceptable accounting standard in the event the Company is required by applicable law to prepare its financial statements in accordance with IFRS or such other standard or is permitted and elects to do so, with appropriate reconciliation to U.S. GAAP, unless not then required under the rules of the SEC) and including segment data, together with an audit report thereon, together with a discussion of the “Operating Results” and “Liquidity” for such fiscal years prepared in a manner substantially consistent with the “Operating and Financial Review and Prospects” required by Form 20-F under the Exchange Act (or any replacement or successor form) which is incorporated by reference in the Offering Memorandum from the Company’s Annual Report on Form 20-F for the year ended December 31, 2013 and a “Business Summary of the Financial Year” and discussion of “Business Segments” provided in a manner consistent with its annual report, a description of “Related Party Transactions,” and a description of Indebtedness, within 90 days of the end of each fiscal year; and

 

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(3)                                  quarterly financial information as of and for the period from the beginning of each year to the close of each quarterly period (other than the fourth quarter), together with comparable information for the corresponding period of the preceding year, and a summary “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to the extent and in the form required under the Exchange Act providing a brief discussion of the results of operations for the period within 45 days following the end of the fiscal quarter.

 

The Company shall also comply with the other provisions of Section 314(a) of the TIA.  In addition, so long as the Notes remain outstanding and during any period when the Issuer or the Company is not subject to Section 13 or 15(d) of the Exchange Act other than by virtue of the exemption therefrom pursuant to Rule 12g3-2(b), the Company will furnish to any Holder or beneficial owner of Notes initially offered and sold in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act pursuant to such rule and any prospective purchaser in the United States designated by such Holder or beneficial owner, upon request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

If and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange, copies of such reports shall also be available at the specified office of the Listing Agent in Luxembourg.

 

Deliveries of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s, the Company’s or any Guarantor’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).  The Trustee shall have no obligation to review such reports to determine if the information required by this Section 4.10 is contained therein.

 

SECTION 4.11                                            Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

Within 30 days following a Change of Control Triggering Event, the Issuer will mail a notice to each Holder with a copy to the Trustee stating:

 

(1)                                  that a Change of Control Triggering Event has occurred and that such Holder has the right to require the Issuer to purchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

 

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(2)                                  the circumstances and relevant facts regarding such Change of Control Triggering Event (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control Triggering Event);

 

(3)                                  the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed);

 

(4)                                  that each Note will be subject to repurchase only in amounts of $2,000 or integral multiples of $1,000 in excess thereof; and

 

(5)                                  the instructions determined by the Issuer, consistent with the covenant described hereunder, that a Holder must follow in order to have its Notes purchased.

 

(6)                                  that any Note not tendered will continue to accrue interest;

 

(7)                                  that, unless the Issuer defaults in the payment of the Change of Control purchase price, any Notes accepted for payment shall cease to accrue interest after the repurchase date;

 

(8)                                  that Holders accepting the offer to have their Notes repurchased pursuant to a change of control offer will be required to surrender the Notes to the Paying Agent or any other Agent specified in the notice at the address specified in the notice prior to the close of business on the Business Day preceding the repurchase date;

 

(9)                                  that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered;

 

(10)                           any other procedures that a holder must follow to accept a change of control offer or effect withdrawal of such acceptance; and

 

(11)                           the name and address of the Paying Agent.

 

On the repurchase date, the Issuer shall, to the extent lawful:

 

(1)                                  accept for payment Notes or portions thereof validly tendered pursuant to the change of control offer;

 

(2)                                  deposit with the Paying Agent money sufficient to pay the Change of Control purchase price in respect of all Notes or portions thereof so tendered; and

 

(3)                                  deliver or cause to be delivered to the Trustee Notes so accepted together with an Officers’ Certificate stating the Notes or portions thereof tendered to the Issuer.

 

The Paying Agent shall promptly mail to each Holder of Notes so accepted payment in an amount equal to the purchase price for such Notes, and the Issuer shall execute and issue, and the Trustee shall promptly authenticate and mail to such Holder, a new Note equal in principal amount to any unpurchased portion of the Notes surrendered; provided that each such

 

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new Note shall be issued in an original principal amount in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 4.11.  To the extent that the provisions of any securities laws or regulations or applicable listing requirements conflict with the provisions of this Section 4.11, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.11 by virtue thereof.

 

SECTION 4.12                                            Additional Amounts .  At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts pursuant to Paragraph 2 of the Notes (the “Additional Amounts”) with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.  The Issuer shall indemnify the Trustee and the Paying Agent for, and hold them harmless against, any loss, liability or expense incurred without negligence or willful misconduct on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished to them pursuant to this Section 4.12.

 

The Issuer and each Guarantor (as applicable) will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law.  The Issuer and each Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copy to the Trustee.

 

If the Issuer or the Guarantors conduct business in any jurisdiction (an “Additional Taxing Jurisdiction”) other than a Relevant Taxing Jurisdiction and, as a result, are required by the law of such Additional Taxing Jurisdiction to deduct or withhold any amount on account of taxes imposed by such Additional Taxing Jurisdiction from payments under the Notes which would not have been required to be so deducted or withheld but for such conduct of business in such Additional Taxing Jurisdiction, the Additional Amounts provision described above shall be considered to apply to such Holders as if references in such provision to “Taxes” included taxes imposed by way of deduction or withholding by any such Additional Taxing Jurisdiction (or any political subdivision thereof or taxing authority therein).

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other

 

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liabilities related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein, or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations of this Section 4.12 and Paragraph 2 of the Notes will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any successor Person to the Issuer or the Guarantors.

 

Whenever in this Indenture or in the Notes or any Note Guarantee there is mentioned, in any context, the payment of principal, purchase price, premium or interest, if any, or any other amount payable under or with respect to any Note, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

SECTION 4.13                                            Compliance Certificate; Notice of Default .  The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year an Officers’ Certificate stating whether or not to the best knowledge of the signor thereof, the Issuer and the Guarantors, as the case may be, have complied with all conditions and covenants under this Indenture, whether a Default or an Event of Default has occurred during such period, and, if a Default or an Event of Default has occurred during such period, specifying all such Events of Default and the nature thereof of which such Responsible Officer has knowledge.  Upon becoming aware of, and as of such time that the Issuer should reasonably have become aware of, a Default, the Company also shall deliver to the Trustee, within 30 days thereafter, written notice of any events which would constitute a Default, their status and what action the Issuer is taking or proposes to take in respect thereof, and, in the case of a Default in the payment of interest, principal, redemption payments or any other amount due on the Notes or the Guarantees, such same notice to the Paying Agent.

 

SECTION 4.14                                            Limitation on Sale and Leaseback Transactions .  The Issuer and the Company may not, and may not permit any Guarantor or any Subsidiary to, enter into any Sale and Leaseback Transaction unless:

 

(1)                                  the Issuer or such Guarantor or Subsidiary, as the case may be, could have created a Lien on the property subject to such Sale and Leaseback Transaction if such transaction was financed with Indebtedness without securing the Notes pursuant to Section 4.4; and

 

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(2)                                  the Issuer or such Guarantor or Subsidiary, as the case may be, can Incur an amount of Indebtedness equal to the Attributable Debt in respect of such Sale and Leaseback Transaction.

 

ARTICLE V

 

SUCCESSOR ISSUER OR GUARANTOR

 

SECTION 5.1                                                   Limitation on Mergers and Sales of Assets .  The Issuer and the Company may not, and may not permit any other Guarantor to consolidate or merge with or into (whether or not the Issuer or such Guarantor is the Surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets in one or more related transactions, to another Person unless:

 

(1)                                  the Surviving Person is an entity organized and existing under the laws of Germany, the United Kingdom, any other member state of the European Union (as of December 31, 2003), Luxembourg, Switzerland, the United States of America, or any State thereof or the District of Columbia, or the jurisdiction of formation of the Issuer or any Guarantor; or, if the Surviving Person is an entity organized and existing under the laws of any other jurisdiction, the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the rights of the Holders of the Notes, would not be affected adversely as a result of the law of the jurisdiction of organization of the Surviving Person, insofar as such law affects the ability of the Surviving Person to pay and perform its obligations and undertakings in connection with the Notes (in a transaction involving the Issuer) or its Note Guarantee or the ability of the Surviving Person to obligate itself to pay and perform such obligations and undertakings or the ability of the Holders to enforce such obligations and undertakings;

 

(2)                                  the Surviving Person (if other than the Issuer or a Guarantor) shall expressly assume, (A) in a transaction or series of transactions involving the Issuer, by a supplemental indenture in a form satisfactory to the Trustee, all of the obligations of the Issuer or (B) in a transaction or series of transactions involving a Guarantor (including the Company), by a Guarantee Agreement, in a form satisfactory to the Trustee, all of the obligations of such Guarantor under its Note Guarantee;

 

(3)                                  at the time of and immediately after such transaction, no Default or Event of Default shall have occurred and be continuing; and

 

(4)                                  the Issuer or such Guarantor delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer, assignment, sale, lease, conveyance or other disposition and such supplemental indenture and Guarantee Agreement, if any, comply with this Indenture.

 

SECTION 5.2                                                   Successor Entity Substituted .  Upon any consolidation or merger by the Issuer, the Company or any other Guarantor with or into any other Person, or any conveyance, transfer, sale, assignment, lease or other disposition by the Issuer, the Company or any other Guarantor in one or more transactions, of substantially all of its properties and assets as an

 

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entirety to any Person in accordance with Section 5.1, then if such transaction involves the Company, the Surviving Person shall expressly assume in a supplemental indenture in a form satisfactory to the Trustee, all of the obligations of the Company under the Indenture and in any such case the Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer or such Guarantor under this Indenture with the same effect as if such Surviving Person had been named as the Issuer or had been a Guarantor herein, and thereafter the Issuer or such Guarantor shall be discharged from all obligations and covenants hereunder and under the Notes.

 

Such Surviving Person (if the successor of the Issuer) may cause to be signed, and may issue either in its own name or in the name of the Issuer, any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such Surviving Person instead of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by the Responsible Officers of the Issuer to the Trustee for authentication pursuant to such provisions and any Notes which such Surviving Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions.  All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof.

 

In case of any such consolidation, merger, sale, assignment, transfer, conveyance, lease, or other disposition such changes in phraseology and form may be made in the Notes thereafter to be issued as may be appropriate.

 

SECTION 5.3                                                   Substitution of the Issuer .  The Company, any other Guarantor or a Finance Subsidiary (a “Successor”) may assume the obligations of the Issuer under the Notes, by executing and delivering to the Trustee (a) a supplemental indenture which subjects such person to all of the provisions of the Indenture and (b) an Opinion of Counsel to the effect that such supplemental indenture has been duly authorized and executed by such Person, and constitutes the legal, valid, binding and enforceable obligation of such Person, subject to customary exceptions; provided , that (i) the Successor is formed under the laws of the United States of America, or any State thereof or the District of Columbia, Germany, the United Kingdom or any other member state of the European Union as of December 31, 2003 and (ii) no Additional Amounts would be or become payable with respect to the Notes at the time of such assumption, or as result of any change in the laws of the jurisdiction of formation of such Successor that was reasonably foreseeable at such time.  The Successor shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture with the same effect as if it were the Issuer thereunder, and the former Issuer shall be discharged from all obligations and covenants under this Indenture and the Notes.

 

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ARTICLE VI

 

DEFAULT AND REMEDIES

 

SECTION 6.1                                                   Events of Default .  Whenever used herein with respect to the Notes, “Event of Default” means any one of the following events which shall have occurred and be continuing:

 

(1)                                  failure for 30 days to pay interest on the Notes, including any Additional Amounts in respect thereof, when due; or

 

(2)                                  failure to pay principal of or premium, if any, on the Notes when due, whether at maturity, upon redemption, by declaration or otherwise; or

 

(3)                                  failure to observe or perform any other covenant contained in this Indenture for 60 days after notice as provided in this Indenture; or

 

(4)                                  default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is Guaranteed by the Company), whether such Indebtedness or Guarantee now exists or is Incurred after the Closing Date, if (A) such default results in the acceleration of such Indebtedness prior to its express maturity or will constitute a default in the payment of such Indebtedness and (B) the principal amount of any such Indebtedness that has been accelerated or not paid at maturity, when added to the aggregate principal amount of all other such Indebtedness, at such time, that has been accelerated or not paid at maturity, exceeds $100 million; or

 

(5)                                  any final judgment or judgments (not covered by insurance) which can no longer be appealed for the payment of money in excess of $100 million shall be rendered against the Issuer or the Company or any of its Subsidiaries and shall not be discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect; or

 

(6)                                  any Note Guarantee shall cease to be in full force and effect in accordance with its terms for any reason except pursuant to the terms of this Indenture governing the release of Note Guarantees or the satisfaction in full of all the obligations thereunder or shall be declared invalid or unenforceable other than as contemplated by its terms, or any Guarantor shall repudiate, deny or disaffirm any of its obligations thereunder; or

 

(7)                                  the Company, the Guarantors, the Issuer or any of the Company’s Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:

 

(a)                                  commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or makes a general assignment for the benefit of or a composition with its creditors or, for any of the reasons set out in Sections 17-19 of the German Insolvency Code ( Insolvenzordnung ), files for insolvency ( Antrag auf Eröffnung eines

 

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Insolvenzverfahrens ) or the board of directors ( Geschäftsführer ) is required by law to file for insolvency, a creditor files for the opening of insolvency proceedings and such filing is not frivolous and not dismissed within a period of one month by the competent insolvency court, or the competent court takes any of the actions set out in Section 21 of the German Insolvenzordnung or a competent court institutes insolvency proceedings ( Eröffnung des Insolvenzverfahrens ) or denies a petition for commencement of insolvency proceeding by reason of insufficient assets,

 

(b)                                  commences a voluntary case,

 

(c)                                   consents to the entry of an order for relief against it in an involuntary case,

 

(d)                                  consents to the appointment of a custodian of it or for all or substantially all of its property,

 

(e)                                   makes a general assignment for the benefit of its creditors, or

 

(f)                                    takes any corporate action to authorize or effect any of the foregoing.

 

A default under clause (3) of this paragraph will not constitute an Event of Default unless the Trustee or Holders of 25% in principal amount of the outstanding Notes notify the Issuer and the Company of such default and such default is not cured within the time specified in clause (3).

 

SECTION 6.2                                                   Acceleration .  If an Event of Default (other than an Event of Default described in clause (7) of Section 6.1 hereof) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the outstanding Notes by notice to the Issuer, the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, and Additional Amounts, if any, on all the Notes to be due and payable.  Upon such a declaration, such principal, premium, accrued and unpaid interest, and Additional Amounts, if any, will be due and payable immediately.  If an Event of Default described in clause (7) of section 6.1 above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

 

SECTION 6.3                                                   Other Remedies .  If an Event of Default of which the Trustee is aware occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or, premium, if any, interest, and Additional Amounts, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

 

SECTION 6.4                                                   The Trustee May Enforce Claims Without Possession of Notes .  All rights of action and claims under this Indenture or the Notes may be prosecuted and

 

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enforced by the Trustee (without liability) without the possession of any of the Notes or the production thereof in any proceeding relating thereto.

 

SECTION 6.5                                                   Rights and Remedies Cumulative .  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy.

 

SECTION 6.6                                                   Delay or Omission Not Waiver .  No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by the Indenture or by law to the Trustee or to the Holders of Notes may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Notes, in each case in accordance with the terms of this Indenture.

 

SECTION 6.7                                                   Waiver of Past Defaults .  Subject to Sections 2.10, 6.10 and 9.2, at any time after a declaration of acceleration with respect to the Notes as described in Section 6.2, the Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Issuer and to the Trustee, may waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such declaration of acceleration with respect to the Notes and its consequences if (i) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.  Such waiver shall not excuse a continuing Event of Default in the payment of interest, premium, if any, principal or Additional Amounts, if any, on such Note held by a non-consenting Holder, or in respect of a covenant or a provision which cannot be amended or modified without the consent of each Holder affected thereby.  The Issuer shall promptly deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders has consented to such waiver and attaching copies of such consents.  When a Default or Event of Default is waived, it is cured and ceases.

 

SECTION 6.8                                                   Control by Majority .  Subject to Section 2.10, the Holders of not less than a majority in principal amount of the outstanding Notes may, by written notice to the Trustee, direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it.  Subject to Section 7.1, however, the Trustee may refuse to follow any direction that conflicts with any law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of another Holder of Notes, or that may involve the Trustee in personal liability; provided , however , that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.  Prior to taking any action under this Indenture, the Trustee will be entitled to indemnification

 

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satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action in accordance with Section 7.7.

 

SECTION 6.9                                                   Limitation on Suits .  Subject to Section 6.10, no Holder of Notes may pursue any remedy with respect to this Indenture or the Notes unless:

 

(1)                                  such Holder has previously given the Trustee notice that an Event of Default is continuing;

 

(2)                                  Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;

 

(3)                                  such Holders have offered the Trustee reasonable security or indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(4)                                  the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of satisfactory security or indemnity; and

 

(5)                                  the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

 

SECTION 6.10                                            Rights of Holders To Receive Payment .  Notwithstanding any other provision of this Indenture (including, without limitation, Section 8.9 hereof), the right of any Holder to receive payment of principal of, premium, if any, interest, and Additional Amounts, if any, on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

SECTION 6.11                                            Collection Suit by Trustee .  If an Event of Default in payment of principal, premium, if any, interest and Additional Amounts, if any, specified in clause (1) or clause (2) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount of principal, premium, if any, and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.

 

SECTION 6.12                                            Trustee May File Proofs of Claim .  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amount due to the Trustee under Section 7.7, accountants and experts) and the Holders allowed in any judicial proceedings relating to the Company, its creditors or its property or other obligor on the Notes, its creditors and its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any

 

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Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee under Section 7.7.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties which the Holders of the Notes may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.

 

SECTION 6.13                                            Priorities .  If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:

 

First :  to the Trustee and the Agents for amounts due under Section 7.7, including (but not limited to) payment of all compensation, fees, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second :  to Holders for amounts due and unpaid on the Notes for principal, premium, if any, interest and Additional Amounts, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, interest and Additional Amounts, if any, respectively; and

 

Third :  to the Issuer, the Guarantors or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct.

 

The Trustee, upon prior notice to the Issuer, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.13; provided that the failure to give any such notice shall not affect the establishment of such record date or payment date for Holders pursuant to this Section 6.13.

 

SECTION 6.14                                            Restoration of Rights and Remedies .  If the Trustee or any Holder of any Note has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Issuer, the Trustee and the Holders of Notes shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders of Notes shall continue as though no such proceeding had been instituted.

 

SECTION 6.15                                            Undertaking for Costs .  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party

 

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litigant.  This Section 6.15 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.10, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes.

 

SECTION 6.16                                            Notices of Default .  If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder of Notes notice of the Default within 90 days after it has become known to the Trustee.  Except in the case of a Default in the payment of principal of, premium, if any, interest and Additional Amounts, if any, on any Note, the Trustee may withhold notice if and so long as a committee of Trust Officers determines that withholding notice is in the interests of such Holders of Notes.

 

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1                                                   Duties of Trustee .  If an Event of Default actually known to a Trust Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.  Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any of the Holders of Notes, unless they shall have offered to the Trustee reasonable security and indemnity satisfactory to the Trustee against any loss, liability or expense in accordance with the sixth paragraph of Section 7.7.

 

(a)                                  Except during the continuance of an Event of Default actually known to the Trustee:

 

(1)                                  The Trustee and the Agents will perform only those duties as are specifically set forth herein and no others and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Agents.

 

(2)                                  In the absence of willful misconduct on their part, the Trustee and the Agents may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions and such other documents delivered to them pursuant to Section 11.2 and conforming to the requirements of this Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

 

(b)                                  The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(1)                                  This paragraph does not limit the effect of subsection (a) of this Section 7.1.

 

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(2)                                  Neither the Trustee nor Agent shall be liable for any error of judgment made in good faith by a Trust Officer of such Trustee or Agent, unless it is proved that the Trustee or such Agent was negligent in ascertaining the pertinent facts.

 

(3)                                  The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.2, 6.7 or 6.8.

 

(c)                                   No provision of this Indenture shall require the Trustee or any Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders if it shall have reasonable grounds for believing that repayment of such funds is not assured to it or it does not receive an indemnity satisfactory to it in its sole discretion against such risk, liability, loss, fee or expense which might be incurred by it in the performance of any of its duties hereunder.

 

(d)                                  Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to the first paragraph and subsections (a), (b) and (c) of this Section 7.1.

 

(e)                                   Neither the Trustee nor the Agents shall be liable for interest on any money received by it except as the Trustee and any Agent may agree in writing with the Issuer.  Money held in trust by the Trustee or any Agent need not be segregated from other funds except to the extent required by law.

 

(f)                                    Any provision hereof relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

 

SECTION 7.2                                                   Rights of Trustee .  Subject to Section 7.1:

 

(a)                                  The Trustee and each Agent may rely conclusively on and shall be protected from acting or refraining from acting based upon any document believed by them to be genuine and to have been signed or presented by the proper Person.  Neither the Trustee nor any Agent shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document.  The Trustee shall not be deemed to have notice or any knowledge of any matter (including without limitation Defaults or Events of Default) unless a Trust Officer assigned to and working in the Trustee’s Corporate Trust Office which is administering this Indenture has actual knowledge thereof or unless written notice thereof is received by the Trustee, attention:  Corporate Trust and such notice clearly references the Notes, the Issuer or this Indenture.

 

(b)                                  Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers’ Certificate, Issuer Order (as applicable) or an Opinion of Counsel or both.  Neither the Trustee nor any Agent shall be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

 

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(c)                                   The Trustee and any Agent may act through their attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee or such Agent) appointed with due care.

 

(d)                                  The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers conferred upon it by this Indenture; provided , however , that the Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

 

(e)                                   The Trustee or any Agent may consult with counsel of its selection and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder and in accordance with the advice or opinion of such counsel.

 

(f)                                    Except to the extent provided for in Section 9.1 and subject to Section 9.2 hereof, the Trustee may (but shall not be obligated to), without the consent of the Holders, give any consent, waiver or approval required by the terms hereof, but shall not without the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding (i) give any consent, waiver or approval or (ii) agree to any amendment or modification of this Indenture, in each case, that shall have a material adverse effect on the interests of any Holder.  The Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any consent, waiver, approval, amendment or modification shall have a material adverse effect on the interests of any Holder.

 

SECTION 7.3                                                   Individual Rights of Trustee .  The Trustee or any Agent in its respective individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, the Guarantors, their Subsidiaries, or their respective Affiliates with the same rights it would have if it were not the Trustee or an Agent.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights.

 

SECTION 7.4                                                   Trustee’s Disclaimer .  The Trustee and the Agents shall not be responsible for and make no representation as to the validity, effectiveness or adequacy of this Indenture, the offering materials related to the Notes or the Notes; they shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision hereof; and they shall not be responsible for any statement or recital herein of the Issuer or the Guarantors or any document issued in connection with the sale of Notes or any statement in the Notes other than the Trustee’s certificate of authentication.

 

SECTION 7.5                                                   Notice of Default .  If an Event of Default occurs and is continuing and a Trust Officer of the Trustee receives actual notice of such event, the Trustee shall mail to each Holder, as their names and addresses appear on the list of Holders described in Section 2.5, notice of the uncured Default or Event of Default within 90 days after the Trustee receives such notice.  Except in the case of a Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Trust Officers determines that withholding the notice is in the interest of the Holders.

 

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SECTION 7.6                                                   Reports by Trustee to Holders of the Notes .  Within 60 days after each May 15 beginning with May 15, 2015, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with TIA § 313(b).  The Trustee shall also transmit by mail all reports as required by TIA § 313(c).

 

A copy of each report at the time of its mailing to the Holders shall be mailed to the Issuer and filed with the SEC and each stock exchange on which the Issuer has informed the Trustee in writing the Notes are listed in accordance with TIA § 313(d).  The Issuer shall promptly notify the Trustee when the Notes are listed on any stock exchange and of any delisting thereof.

 

SECTION 7.7                                                   Compensation and Indemnity .  The Issuer shall pay to the Trustee and Agents from time to time such compensation as the Issuer and the Trustee or Agent, as applicable, shall from time to time agree in writing for its acceptance of this Indenture and services hereunder.  The Trustee’s and the Agents’ compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer shall reimburse the Trustee and Agents upon request for all reasonable and duly documented and invoiced disbursements, expenses and advances (including reasonable fees and expenses of counsel) incurred or made by it in addition to the compensation for their services, except any such disbursements, expenses and advances as may be attributable to the Trustee’s or any Agent’s negligence, willful misconduct or bad faith.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s and Agents’ accountants, experts and counsel and any taxes or other expenses incurred by a trust created pursuant to Section 8.4 hereof.

 

The Issuer agrees to pay the fees and expenses of the Trustee’s legal counsel in connection with its review, preparation and delivery of this Indenture and related documentation.

 

The Issuer shall indemnify each of the Trustee, any predecessor Trustee and the Agents (which, for purposes of this paragraph, include such Trustee’s and Agents’ officers, directors, employees and agents) for, and hold them harmless against, any and all loss, damage, claim, proceedings, demands, costs, expense or liability including taxes (other than taxes based on the income of the Trustee) incurred by the Trustee or an Agent without negligence or willful misconduct on its part in connection with acceptance of administration of this trust and performance of any provisions under this Indenture, including the reasonable expenses and attorneys’ fees and expenses of defending itself against any claim of liability arising hereunder.  The Trustee and the Agents shall notify the Issuer promptly of any claim asserted against the Trustee or such Agent for which it may seek indemnity.  However, the failure by the Trustee or the Agent to so notify the Issuer shall not relieve the Issuer of its obligations hereunder.  Subject to Section 7.1(b), the Issuer need not reimburse or indemnify against any loss liability or expense incurred by the Trustee through its own willful misconduct or negligence.  The Issuer shall defend the claim and the Trustee or such Agent shall cooperate in the defense (and may employ its own counsel reasonably satisfactory to the Trustee) at the Issuer’s expense.  The Trustee or such Agent may have separate counsel and the Issuer shall pay the reasonable fees and expenses of

 

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such counsel.  The Issuer need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld.

 

To secure the Issuer’s payment obligations in this Section 7.7, the Trustee and the Agents shall have a senior Lien prior to the Notes against all money or property held or collected by the Trustee and the Agents, in its capacity as Trustee or Agent, except money or property held in trust to pay principal or premium, if any, and Additional Amounts, if any, or interest on particular Notes.

 

When the Trustee or an Agent incurs expenses or renders services after the occurrence of an Event of Default specified in clause (7) of Section 6.1, the expenses (including the reasonable fees and expenses of its agents and counsel) and the compensation for the services shall be preferred over the status of the Holders in a proceeding under any Bankruptcy Law and are intended to constitute expenses of administration under any Bankruptcy Law.  The Issuer’s obligations under this Section 7.7 and any claim or Lien arising hereunder shall survive the termination of this Indenture, the resignation or removal of any Trustee or Agent, the discharge of the Issuer’s obligations pursuant to Article VIII and any rejection or termination under any Bankruptcy Law.

 

Save as otherwise expressly provided in this Indenture, the Trustee shall have absolute and uncontrolled discretion as to the exercise of the discretion vested in the Trustee by this Indenture but, whenever the Trustee is bound to act under this Indenture at the request or direction of the Holders of Notes, the Trustee shall nevertheless not be so bound unless first indemnified to its satisfaction against all proceedings, claims and demands to which it may render itself liable and all costs, charges, expenses and liabilities which it may incur by so doing.

 

Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee, is subject to this Section 7.7.

 

The Company shall be jointly and severally liable with the Issuer for all of the Issuer’s obligations pursuant to this Section 7.7.

 

SECTION 7.8                                                   Replacement of Trustee .  The Trustee and any Agent may resign at any time by so notifying the Issuer in writing.  The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Issuer and the Trustee in writing and may appoint a successor trustee with the Issuer’s consent.  A resignation or removal of the Trustee or any Agent and appointment of a successor Trustee or Agent, as the case may be, shall become effective only upon the acceptance by the successor Trustee or the successor Agent, as the case may be, of appointment as provided in this section.  The Issuer may remove the Trustee if:

 

(1)                                  the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(2)                                  a receiver or other public officer takes charge of the Trustee or its property; or

 

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(3)                                  the Trustee becomes incapable of acting with respect to its duties hereunder.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall notify each Holder of such event and shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may, with the Issuer’s consent, appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.  If the Issuer does not reasonably promptly appoint a successor Trustee, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee.

 

A successor Trustee or successor Agent, as applicable, shall deliver a written acceptance of its appointment to the retiring Trustee or Agent, as applicable, and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee or Agent, as applicable, shall become effective, and the successor Trustee or Agent, as applicable, shall have all the rights, powers and duties of the Trustee or Agent, as applicable, under this Indenture.  Promptly after that, the retiring Trustee or Agent, as applicable, shall transfer, after payment of all sums then owing to the Trustee or Agent, as applicable, pursuant to Section 7.7, all property held by it as Trustee or Agent, as applicable, to the successor Trustee or Agent, as applicable, subject to the Lien provided in Section 7.7.  A successor Trustee or Agent, as applicable, shall mail notice of its succession to each Holder.

 

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Issuer’s obligations under Section 7.7 shall continue for the benefit of the retiring Trustee and the Issuer shall pay to any replaced or removed Trustee all amounts owed under Section 7.7 upon such replacement or removal.

 

SECTION 7.9                                                   Successor Trustee by Merger, Etc .  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee.  In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by consolidation, merger or conversion to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

 

SECTION 7.10                                            Eligibility; Disqualification .  There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power and that is subject to supervision or examination by federal or state authorities. 

 

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The Trustee together with its affiliates shall at all times have a combined capital surplus of at least $50.0 million as set forth in its most recent annual report of condition.

 

This Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(l), (2) and (5).  The Trustee is subject to TIA § 310(b) including the provision in § 310(b)(1); provided that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities, or conflicts of interest or participation in other securities, of the Issuer or the Guarantors are outstanding if the requirements for exclusion set forth in TIA § 310(b)(1) are met.

 

SECTION 7.11                                            Preferential Collection of Claims Against the Company .  The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

 

ARTICLE VIII

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

SECTION 8.1                                                   Option To Effect Legal Defeasance or Covenant Defeasance .  The Issuer may, at the option of its Board of Directors evidenced by a Board Resolution, at any time, with respect to the Notes, elect to have either Section 8.2 or 8.3 be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.

 

SECTION 8.2                                                   Legal Defeasance and Discharge .  Upon the Issuer’s exercise under Section 8.1 of the option applicable to this Section 8.2, the Issuer shall be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, such Legal Defeasance means that the Issuer shall be deemed to have paid and discharged all the obligations relating to the outstanding Notes and the Notes shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.6, Section 8.8 and the other Sections of this Indenture referred to below in this Section 8.2, and to have satisfied all of their other obligations under such Notes and this Indenture and cured all then existing Events of Default (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder:  (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, interest and Additional Amounts, if any, on such Notes when such payments are due or on the Redemption Date solely out of the Defeasance Trust created pursuant to this Indenture; (b) the Issuer’s obligations with respect to Notes concerning issuing temporary Notes, or, where relevant, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s or Guarantors’ obligations in connection therewith; and (d) this Article VIII and the obligations set forth in Section 8.6 hereof.

 

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Subject to compliance with this Article VIII, the Issuer may exercise its option under Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 with respect to the Notes.

 

SECTION 8.3                                                   Covenant Defeasance .  Upon the Issuer’s exercise under Section 8.1 of the option applicable to this Section 8.3, the Issuer, the Company and the other Guarantors shall be released from any obligations under the covenants contained in Article IV, Section 5.1(4), Sections 6.1(3), (4) and (5), and Section 6.1 (7) (with respect to the Company and the Subsidiaries other than the Issuer), hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, such Covenant Defeasance means that, (i) with respect to the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and (ii) payment on the Notes may not be accelerated because of an Event of Default specified in Sections 6.1 (3), (4) or (5), or Section 6.1 (7) (with respect only to the Company and the Subsidiaries other than the Issuer).

 

SECTION 8.4                                                   Conditions to Legal or Covenant Defeasance .  In order to exercise either of the defeasance options under Section 8.2 or Section 8.3 hereof, the Issuer must comply with the following conditions:

 

(1)                                  the Issuer shall have irrevocably deposited in trust (the “Defeasance Trust”) with the Trustee for the benefit of the Holders Designated Government Obligations, for the payment of principal, premium, if any, interest on the Notes to redemption or maturity, as the case may be;

 

(2)                                  the Issuer shall have delivered to the Trustee an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred.  In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable U.S. federal income tax law;

 

(3)                                  the Issuer shall have delivered to the Trustee an Opinion of Counsel in the Federal Republic of Germany (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for income tax purposes of the Federal Republic of Germany as a result of such deposit and defeasance and will be subject to income tax in the Federal Republic of Germany on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

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(4)                                  the Issuer shall have delivered to the Trustee an Opinion of Counsel in Luxembourg (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for income tax purposes of Luxem bourg as a result of such deposit and defeasance and will be subject to income tax in Luxembourg on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

(5)                                  no Default or Event of Default (other than to Incur Indebtedness used to defease the Notes under this Article) shall have occurred and be continuing on the date of such deposit in the Defeasance Trust or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;

 

(6)                                  such legal defeasance or covenant defeasance shall not result in a breach or violation of any other material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

 

(7)                                  the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over any other creditors of the Issuer or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuer or others; and

 

(8)                                  the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the legal defeasance or the covenant defeasance have been complied with.

 

SECTION 8.5                                                   Satisfaction and Discharge of Indenture .  This Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder when either (i) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation or (ii) (A) all such Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount of money sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued and unpaid interest and Additional Amounts, if any, to the date of maturity or redemption, (B) no Default (other than to Incur Indebtedness used to defease the Notes under this Article) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer, the Company or any of the other Guarantors is a party or by which it is bound, (C) the Issuer has paid, or caused to be paid, all sums payable by it under this Indenture, and (D) the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to give the notice of redemption and apply the deposited money toward the payment of such Notes at maturity or the Redemption Date, as the case may be.  In addition, the Issuer must

 

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deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

SECTION 8.6                                                   Survival of Certain Obligations .  Notwithstanding the satisfaction and discharge of this Indenture and of the Notes in the manner referred to in Section 8.1, 8.2, 8.3, 8.4 or 8.5, the respective obligations of the Issuer, the Company, the other Guarantors and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, 4.1 (with respect to the Trustee and, as far as the Issuer, the Company, and each of the other Guarantors is concerned, subject to Sections 8.2 and 8.5), 4.2, 4.6, 4.13 and 6.10, Article VII and Article VIII shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Issuer, the Company, the other Guarantors and the Trustee under Articles VII and VIII shall survive.  Nothing contained in this Article VIII shall abrogate any of the obligations or duties of the Trustee under this Indenture.

 

SECTION 8.7                                                   Acknowledgment of Discharge by Trustee .  Subject to Section 8.10, after (i) the conditions of Section 8.4 or 8.5 have been satisfied, (ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer and (iii) the Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon written request shall acknowledge in writing the discharge of all of the Issuer’s, the Company’s, and the other Guarantors’ obligations under this Indenture except for those surviving obligations specified in this Article VIII.

 

SECTION 8.8                                                   Application of Trust Moneys .  All cash deposited with the Trustee pursuant to Section 8.4 or 8.5 in respect of Notes shall be held in trust and applied by it, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such defeased or discharged Notes of all sums due and to become due thereon for principal, premium, if any, interest and Additional Amounts, if any, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash deposited pursuant to Section 8.4 or 8.5 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of outstanding Notes.

 

SECTION 8.9                                                   Repayment to the Issuer; Unclaimed Money .  The Trustee and any Paying Agent shall promptly pay or return to the Issuer upon Issuer Order any cash held by them at any time that are not required for the payment of the principal of, premium, if any, interest and Additional Amounts, if any, on the defeased or discharged Notes for which cash has been deposited pursuant to Section 8.4 or 8.5.

 

Any money held by the Trustee or any Paying Agent under this Article VIII, in trust for the payment of the principal of, premium, if any, interest and Additional Amounts, if any, on any Note and remaining unclaimed for two years after such principal, premium, if any, interest and Additional Amounts, if any, that has become due and payable shall be paid to the Issuer upon Issuer Order or if then held by the Issuer shall be discharged from such trust; and the

 

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Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer give notice to the Holders or cause to be published notice once, in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) or in the case of Definitive Notes, in addition to such publication, mail to Holders by first-class mail, postage prepaid, at their respective addresses as they appear on the registration books of the Registrar (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require, publish in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)), that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification, any unclaimed balance of such money then remaining will be repaid to the Issuer).

 

Claims against the Issuer for the payment of principal or interest and Additional Amounts, if any, on the Notes will become void unless presentment for payment is made (where so required in this Indenture) within, in the case of principal and Additional Amounts, if any, a period of ten years, or, in the case of interest, a period of five years, in each case from the applicable original payment date therefor.

 

SECTION 8.10                                            Reinstatement .  If the Trustee or Paying Agent is unable to apply any cash in accordance with Section 8.2, 8.3, 8.4 or 8.5 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and the Guarantors’ obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2, 8.3, 8.4 or 8.5 until such time as the Trustee or Paying Agent is permitted to apply all such cash in accordance with Section 8.2, 8.3, 8.4 or 8.5; provided , however , that if the Issuer has made any payment of interest on, premium, if any, principal and Additional Amounts, if any, of any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE IX

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

SECTION 9.1                                                   Without Consent of Holders of Notes .  Notwithstanding Section 9.2 hereof, the Issuer and the Trustee together may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note to:

 

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(1)                                  cure any ambiguity, omission, defect or inconsistency;

 

(2)                                  provide for the assumption by a successor entity of the obligations of the Issuer under and pursuant to this Indenture or of a Guarantor (other than the Company) under the Note Guarantees;

 

(3)                                  provide for uncertificated Notes in addition to or in place of certificated Notes ( provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(B) of the Code);

 

(4)                                  add Note Guarantees with respect to the Notes;

 

(5)                                  secure the Notes;

 

(6)                                  add to the covenants of the Issuer and the Guarantors for the benefit of the Holders or to surrender any right or power conferred upon the Issuer;

 

(7)                                  evidence and provide for the acceptance and appointment under this Indenture of any successor trustee;

 

(8)                                  comply with the rules of any applicable securities depositary;

 

(9)                                  issue Additional Notes in accordance with this Indenture; or

 

(10)                           make any change that does not adversely affect the rights of any Holder of Notes under this Indenture.

 

SECTION 9.2                                                   With Consent of Holders of Notes .  The Issuer and the Trustee may amend or supplement this Indenture, the Notes or any amended or supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for the Notes), and, subject to Sections 6.7 and 6.10, any existing Default or Event of Default and its consequences or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for the Notes).  However, without the consent of each Holder of an outstanding Note adversely affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder of Notes):

 

(1)                                  reduce the percentage of principal amount of Notes whose Holders must consent to an amendment;

 

(2)                                  reduce the stated rate of or extend the stated time for payment of interest on any such Note;

 

(3)                                  reduce the principal of or extend the Stated Maturity of any such Note;

 

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(4)                                  reduce the premium payable upon the redemption of any such Note or change the time at which any such Note may be redeemed as described under Section 3.1;

 

(5)                                  reduce the premium payable upon the repurchase of any Note, change the time at which any Note may be repurchased, or change any of the associated definitions related to the provisions of Section 4.11 once the obligation to repurchase the Notes has arisen;

 

(6)                                  make any such Note payable in money other than that stated in such Note;

 

(7)                                  impair the right of any Holder to receive payment of premium, if any, principal of and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

 

(8)                                  make any change in the amendment provisions which require each Holder’s consent or in the waiver provisions; or

 

(9)                                  release the Company from its Note Guarantee (other than in accordance with the terms of this Indenture).

 

It shall not be necessary for the consent of the Holders of Notes under this Section 9.2 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

 

SECTION 9.3                                                   Notice of Amendment, Supplement or Waiver .  After an amendment, supplement or waiver under Section 9.1 or 9.2 hereto becomes effective, the Issuer shall mail to the Holders of Notes a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

 

SECTION 9.4                                                   Revocation and Effect of Consents .  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder of a Note.  An amendment or waiver becomes effective once the requisite number of consents is received by the Issuer or the Trustee.

 

The Issuer may, but shall not be obligated to, fix a record date for determining which Holders of the Notes must consent to such amendment, supplement or waiver.  If the Issuer fixes a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of Notes furnished to the Trustee prior to such solicitation pursuant to Section 2.5 or (ii) such other date as the Issuer shall designate.

 

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SECTION 9.5                                                   Notation on or Exchange of Notes .  The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

SECTION 9.6                                                   Trustee To Sign Amendments, Etc .  The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article IX; provided , however , that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which adversely affects the Trustee’s own rights, duties or immunities under this Indenture.  The Trustee shall be entitled to receive indemnity reasonably satisfactory to it, and shall be fully protected in relying upon, if delivered, an Opinion of Counsel and an Officers’ Certificate each stating that the execution of any such amendment, supplement or waiver is authorized or permitted by this Indenture and constitutes the legal, valid and binding obligations of the Issuer and the Guarantors enforceable in accordance with its terms.  Any Opinion of Counsel shall not be an expense of the Trustee.  With respect to any amendment, supplement or waiver under Section 9.2, the Trustee shall also be entitled to receive evidence satisfactory to it of the consent of the Holders.

 

ARTICLE X

 

NOTE GUARANTEE

 

SECTION 10.1                                            Note Guarantee .

 

(a)                                  Each Guarantor hereby jointly and severally, irrevocably and unconditionally Guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, call for redemption, purchase or otherwise, in accordance with the terms of such Note and of this Indenture.  In case of the failure of the Issuer punctually to make any such payment, each Guarantor hereby jointly and severally agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by acceleration, call for redemption, purchase or otherwise, and as if such payment were made by the Issuer.  The Note Guarantee extends to the Issuer’s repurchase obligations arising from a Change of Control pursuant to Section 4.11.

 

Each Guarantor hereby jointly and severally agrees that its obligations hereunder shall be irrevocable and unconditional, irrespective of the validity, regularity or enforceability of such Note or this Indenture, the absence of any action to enforce the same, any exchange, release or non-perfection of any Lien on any collateral for, or any release or amendment or waiver of any term of any other Guarantee of, or any consent to departure from any requirement of any other Guarantee of all or any of the Notes, the effects of Bankruptcy Law applicable in the event of bankruptcy proceedings being opened with respect to the Issuer, of all or any portion of the

 

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claims of the Trustee or any of the Holders for payment of any of the Notes, any waiver or consent by the Holder of such Note or by the Trustee with respect to any provisions thereof or of this Indenture, the obtaining of any judgment against the Issuer or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Issuer or any other Person or any collateral, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Note Guarantee.  Each Guarantor hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest (including Additional Amounts, if any) on such Note, whether at its Stated Maturity, by acceleration, call for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against each Guarantor to enforce the Note Guarantee without first proceeding against the Issuer.  Each Guarantor agrees that, to the extent permitted by applicable law, if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders is prevented by applicable law from exercising its respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, or the Trustee or the Holders are prevented from taking any action to realize on any collateral, such Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

 

No provision of the Note Guarantee or of this Indenture shall alter or impair the Note Guarantee of any Guarantor, which is absolute and unconditional, of the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on the Note upon which such Note Guarantee is endorsed.

 

Each Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation or reorganization or equivalent proceeding under applicable law, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, or the equivalent of any of the foregoing under applicable law, and shall, to the fullest extent permitted by applicable law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a voidable preference, fraudulent transfer, or as otherwise provided under similar laws affecting the rights of creditors generally or under applicable laws of the jurisdiction of formation of the Issuer, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

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The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

 

(b)                                  Each Note Guarantee (other than the Company’s Note Guarantee) will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Note Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally or under applicable law of the jurisdiction of incorporation of such Guarantor.

 

(c)                                   In the case of Fresenius Medical Care Deutschland GmbH (“FMCD”), the following provisions apply:

 

(i)                                      Without limiting the agreements set forth in Section 11.8, the Note Guarantee of FMCD will be limited if and to the extent payment under such Note Guarantee or the application of enforcement proceeds would cause (x) FMCD’s net assets ( Reinvermögen - calculated as the sum of the balance sheet positions shown under § 266(2)(A), (B) and (C) German Commercial Code ( Handelsgesetzbuch )) less the sum of the liabilities (shown under the balance sheet positions pursuant to § 266(3)(B), (C) and (D) German Commercial Code) to fall below FMCD’s registered share capital ( Stammkapital ) or (y) (if the amount of the net assets is already an amount less than the registered share capital) cause such amount to be further reduced and, in either case, thereby affecting the assets required for the obligatory preservation of its registered share capital according to section 30, 31 of the German Limited Liability Company Act ( GmbHG ) (such event a “Capital Impairment”).  For the purposes of calculating the Capital Impairment, the following adjustments will be made:  (x) the amount of any increase of the registered share capital out of retained earnings ( Kapitalerhöhung aus Gesellschaftsmitteln ) after the Closing Date that has been effected without the prior consent of the Trustee shall be deducted from the registered share capital; and (y) liabilities incurred in violation of the provisions of the Notes and this Indenture shall be disregarded. In the event FMCD’s net assets fall below its registered share capital, FMCD, upon request of the Trustee will realize in due course, to the extent legally permitted, any and all of its assets that are shown in the balance sheet with a book value ( Buchwert ) that is significantly lower than the market value of the assets if the relevant assets are not necessary for FMCD’s business ( nicht betriebsnotwendiges Vermögen ).

 

(ii)                                   If FMCD objects to the amount demanded by the Trustee under the Note Guarantee within twenty (20) business days after the Trustee has submitted to FMCD a payment demand FMCD shall appoint within five (5) business days a reputable international auditor to determine the exact amount. The auditor shall notify FMCD and the Trustee of the maximum amount payable under the Note Guarantee within forty (40) business days after its appointment. The costs of such auditor’s determination shall be borne by FMCD. The determination of the auditor shall be binding for FMCD, and the Holders (except for manifest error). To the extent that any payment has been made under the Note Guarantee by FMCD that would be necessary for FMCD to be able to cure any Capital Impairment or Liquidity Impairment such payment shall immediately — upon

 

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FMCD’s demand — be returned to FMCD by any person receiving such payment, provided, however, in no event shall the Trustee or Paying Agent have any responsibility or liability for the return of any amount distributed to any Holder or beneficial owner of the Notes by the Trustee or Paying Agent, including, without limitation, any obligation to seek return of such amounts from such Holder or beneficial owner.

 

(iii)                                If (x) FMCD does not object to the payment amount within the 20 business days period or (y) if FMCD does not appoint the auditor within the 5 business days period or (z) if the auditor fails to notify the amount payable within the 40 days period, then the Trustee shall be entitled to enforce the Note Guarantee without further delay. The burden of demonstration and proof ( Darlegungs- und Beweislast ) regarding the Capital Impairment and the maximum amount payable under the Note Guarantee shall remain with FMCD.

 

(iv)                               The maximum amount payable under the guarantee shall be limited to the extent and as long as FMCD as a consequence of the payment would become unable to pay its debts when due ( zahlungsunfähig ) within the meaning of section 64 GmbHG (such event a “Liquidity Impairment”). For the purpose of establishing whether a Liquidity Impairment would occur, payments made by FMCD after the Trustee has notified FMCD of its intention to enforce the Note Guarantee with respect to payment obligations that are not due at the time of the payment shall be disregarded, unless the Trustee has consented to such payments (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding). From the time the Trustee has notified FMCD and the Company of its intention to enforce the Note Guarantee, the Company may not make any payment demands against FMCD under shareholder loans and all such payment obligations of FMCD towards the Company shall be deferred, subordinated or waived as the Company sees fit, until the Trustee notifies FMCD that it is no longer enforcing the Note Guarantee or the Trustee consents (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding) to the payments to be made to the Company. Such notice may be delivered by the Trustee at any time and, if not previously delivered, will be delivered by the Trustee after the Notes have been repaid in full and all other obligations under this Indenture are satisfied.

 

The limitations in this Section 10.1(c) as to the Capital Impairment shall not apply to the extent FMCD has an adequate compensation claim ( vollwertiger Gegenleistungs- oder Rückgewähranspruch ) against the Company that compensates for any loss incurred due to any payment by FMCD under the Note Guarantee.

 

The limitations in this Section 10.1 (c) shall apply mutatis mutandis to the direct and indirect shareholders of FMCD (other than the Company) if and to the extent the enforcement of the Notes Guarantees constitutes a payment ( Auszahlung ) by the relevant shareholders of FMCD within the meaning of section 30 of the German Limited Liability Company Act ( GmbHG ).

 

SECTION 10.2                                            Execution and Delivery of Note Guarantees .  The Note Guarantees to be endorsed on the Notes shall be in the form attached hereto as Exhibit C .  Each Guarantor hereby agrees to execute its Note Guarantee, in the form attached hereto as Exhibit C , to be endorsed on each Note authenticated and delivered by the Trustee.

 

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The Note Guarantee shall be executed on behalf of the Company by two members of the Management Board of its General Partner and on behalf of any other Guarantor by such Person or Persons duly authorized by the Board of Directors or Management Board of such Guarantor.  The signature of any or all of these Persons on the Note Guarantee may be manual or facsimile.

 

A Note Guarantee bearing the manual or facsimile signature of individuals who were at any time the Responsible Officers of a Guarantor shall bind such Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Note on which such Note Guarantee is endorsed or did not hold such offices at the date of such Note Guarantee.

 

The delivery of any Note by the Trustee, after the authentication thereof in accordance with this Indenture, shall constitute due delivery of the Note Guarantee endorsed thereon on behalf of the Guarantors.  Each of the Guarantors hereby jointly and severally agrees that its Note Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding any failure to endorse a Note Guarantee on any Note.

 

SECTION 10.3                                            Guarantors May Consolidate, Etc., on Certain Terms .  Except as set forth in Section 10.4 and in Article V hereof, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company, the Issuer or another Guarantor or shall prevent any sale, transfer, assignment, lease, conveyance or other disposition of the property of a Guarantor as an entirety or substantially as an entirety to the Company, the Issuer or another Guarantor.

 

SECTION 10.4                                            Release of Guarantors .  (a) Subject to the limitations set forth in Sections 5.1 and 5.2 hereof, concurrently with any consolidation or merger of a Guarantor or any sale, transfer, assignment, lease, conveyance or other disposition of the property of a Guarantor as an entirety or substantially as an entirety, in each case as permitted by Sections 5.1, 5.2 and 10.3 hereof, and upon delivery by the Company or the Issuer to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such consolidation, merger, sale, transfer, assignment, conveyance or other disposition was made in accordance with Sections 5.1, 5.2 and 10.3 hereof, the Trustee shall execute any documents reasonably required in order to acknowledge the release of such Guarantor from its obligations under its Note Guarantee endorsed on the Notes and under this Indenture.  Any Guarantor not released from its obligations under its Note Guarantee endorsed on the Notes and under this Indenture shall remain liable for the full amount of principal of (premium, if any) and interest (including Additional Amounts, if any) on the Notes and for the other obligations of a Guarantor under its Note Guarantee endorsed on the Notes and under this Indenture.  Concurrently with the defeasance of the Notes under Section 8.2 or satisfaction and discharge of this Indenture under Section 8.5 hereof, the Guarantors shall be released from all of their obligations under their Note Guarantees endorsed on the Notes and under this Indenture, without any action on the part of the Trustee or any Holder of Notes.

 

(b)                                  Upon the sale or other disposition (including by way of merger or consolidation) of any Guarantor or the sale, conveyance, transfer, assignment, lease or other disposition of all or substantially all the assets of a Guarantor pursuant to Section 5.1 hereof, such Guarantor

 

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shall automatically be released from all obligations under its Note Guarantees endorsed on the Notes and under this Indenture in accordance with Sections 5.1 and 5.2.

 

(c)                                   At any time a Guarantor (other than the Company) is no longer an obligor under the Credit Facility, such Guarantor will be released and relieved from all of its obligations under its Note Guarantee.

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1                                            Notices .  Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier or first-class mail, postage prepaid, addressed as follows:

 

if to the Company or to FMCD, to it at:

 

Else-Kröner Strasse 1
61352 Bad Homburg
Germany
Facsimile:  011-49-6172-609-2280
Attention:  Michael Brosnan, Chief Financial Officer

 

if to the Issuer:

 

Fresenius Medical Care US Finance II, Inc.
920 Winter Street
Waltham MA  02451-1457
Facsimile:  781 699-9632
Attn:  Douglas G. Kott, Esq.

 

if to FMCH:

 

920 Winter Street
Waltham MA  02451-1457
Facsimile:  781 699-9632
Attn:  Douglas G. Kott, Esq.

 

in each case, with a copy to:

 

Fresenius Medical Care AG & Co. KGaA
Else-Kröner Strasse 1
61352 Bad Homburg
Germany
Facsimile:  011-49-6172-608-5534
Attention:  Dr. Peter Hennke

 

if to the Trustee:

 

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U.S. Bank National Association
225 Asylum Street, 23rd Floor
Hartford, CT  06103
Attention:  Melissa Dumont
Telecopier:  860-241-6897
Telephone:  860-241-6817

 

Each of the Issuer and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person.  Any notice or communication to the Issuer or the Trustee, shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if telecopied; and five (5) calendar days after mailing if sent by first class mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

 

Any notice or communication mailed to a Holder shall be mailed to such Person by first-class mail or other equivalent means at such Person’s address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed.

 

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

 

Notices regarding the Notes given to the Holders will be (a) sent to a leading newspaper having general circulation in New York (which is expected to be The Wall Street Journal (and, if and so long as Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require, published by the Issuer in a newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (b) in the event the Notes are in the form of Definitive Notes, sent by the Issuer, by first-class mail, with a copy to the Trustee, to each Holder of the Notes at such Holder’s address as it appears on the registration books of the registrar.  If and so long as such Notes are listed on any other securities exchange, notices will also be given by the Issuer in accordance with any applicable requirements of such securities exchange.  If and so long as any Notes are represented by one or more Global Notes and ownership of Book-Entry Interests therein are shown on the records of DTC or any successor appointed by DTC at the request of the Issuer, notices will be delivered to DTC or such successor for communication to the owners of such Book-Entry Interests.  Notices given by publication will be deemed given on the first date on which any of the required publications is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing.

 

SECTION 11.2                                            Certificate and Opinion as to Conditions Precedent .  Upon any request or application by the Issuer to the Trustee or an Agent to take any action under this Indenture, the Issuer and the Guarantors shall furnish to the Trustee at the request of the Trustee:

 

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(1)                                  an Officers’ Certificate, in form and substance reasonably acceptable to the Trustee (reasonableness to be determined objectively), stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied or complied with; and

 

(2)                                  an Opinion of Counsel in form and substance reasonably acceptable to the Trustee or such Agent (reasonableness to be determined objectively) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied or complied with.

 

In any case where several matters are required to be certified by, or covered by an Opinion of Counsel of, any specified Person, it is not necessary that all such matters be certified by, or covered by the Opinion of Counsel of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an Opinion of Counsel with respect to some matters and one or more such Persons as to other matters, and any such Person may certify or give an Opinion of Counsel as to such matters in one or several documents.

 

Any certificate of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such Responsible Officer knows, or in the exercise of reasonable care should know, that such Opinion of Counsel with respect to the matters upon which his certificate is based are erroneous.  Any Opinion of Counsel may be based, and may state that it is so based, insofar as it relates to factual matters, upon a certificate of, or representations by, a Responsible Officer or Responsible Officers of the Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

SECTION 11.3                                            Statements Required in Certificate or Opinion .  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(1)                                  a statement that the Person making such certificate or opinion has read such covenant or condition;

 

(2)                                  a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(3)                                  a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4)                                  a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with.

 

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SECTION 11.4                                            Rules by Trustee, Paying Agent, Registrar .  The Trustee, Paying Agent or Registrar may make reasonable rules for its functions.

 

SECTION 11.5                                            Legal Holidays .  If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period.

 

SECTION 11.6                                            Governing Law .  THIS INDENTURE AND THE NOTES, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE LIMITATIONS OF THE NOTE GUARANTEES EXPRESSED IN SECTIONS 10.1(c) HEREOF (AND THE EQUIVALENT PROVISION CONTAINED IN THE NOTE GUARANTEE ENDORSED ON THE NOTES) WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

SECTION 11.7                                            Submission to Jurisdiction .  To the fullest extent permitted by applicable law, each of the Issuer and the Guarantors irrevocably submits to the non-exclusive jurisdiction of any U.S. federal or state court in the Borough of Manhattan in the City of New York, County and State of New York, United States of America, in any suit or proceeding based on or arising under this Indenture or the Notes, and irrevocably agrees that all claims in respect of such suit or proceeding may be determined in any such court.  Each of the Issuer and the Guarantors, to the fullest extent permitted by applicable law, irrevocably and fully waives the defense of an inconvenient forum to the maintenance of such suit or proceeding and irrevocably waives to the fullest extent it may effectively do so any objection which it may now or hereafter have to the laying of venue of any such proceeding, and each of the Issuer and the Guarantors hereby irrevocably consents to be served with notice and service of process by delivery or by registered mail with return receipt requested addressed to FMCH’s registered agent, which as of the date hereof is CT Corporation System, 111 Eighth Avenue, New York, NY 10011 (which service of process by registered mail shall be effective with respect to the Issuer and the Guarantors so long as such return receipt is obtained, or in the event of a refusal to sign such receipt any Holder or the Trustee is able to produce evidence of attempted delivery by such means).  Each of the Issuer and the Guarantors further agrees that such service of process and written notice of such service to the Issuer and the Guarantors in the circumstances described above shall be deemed in every respect effective notice and service of process upon each of the Issuer and the Guarantors in any such action or proceeding.  Nothing herein shall affect the right of any Person to serve process in any other manner permitted by law.  Each of the Issuer and the Guarantors agrees that a final action in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other lawful manner.  Notwithstanding the foregoing, each of the Issuer and the Guarantors hereby agrees that any action arising out of or based on this Indenture or the Notes may also be instituted in any competent court in Germany, and it expressly accepts the jurisdiction of any such court in any such action.

 

Each of the Issuer and the Guarantors hereby irrevocably waives, to the extent permitted by law, any immunity to jurisdiction to which it may otherwise be entitled (including, without limitation, immunity to pre-judgment attachment, post-judgment attachment and execution)

 

75



 

in any legal suit, action or proceeding against it arising out of or based on this Indenture or the Notes.

 

The provisions of this Section 11.7 are intended to be effective upon the execution of this Indenture without any further action by the Issuer and the Guarantors and the introduction of a true copy of this Indenture into evidence shall be conclusive and final evidence as to such matters.

 

SECTION 11.8                                            No Personal Liability of Directors, Officers, Employees and Stockholders .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, the general partner of Fresenius SE, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, this Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.

 

SECTION 11.9                                            Successors .  All agreements of the Issuer in this Indenture and the Notes and the Guarantors in this Indenture and the Note Guarantees shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

 

SECTION 11.10                                     Counterpart Originals .  All parties hereto may sign any number of copies of this Indenture.  Each signed copy or counterpart shall be an original, but all of them together shall represent one and the same agreement.

 

SECTION 11.11                                     Severability .  In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

 

SECTION 11.12                                     Table of Contents, Headings, Etc .  The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

 

SECTION 11.13                                     Trust Indenture Act Controls .  If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA § 318(c), the imposed duties shall control.

 

SECTION 11.14                                     Currency Indemnity .  The U.S. dollar (or any of its successor currencies) is the sole currency of account and payment for all sums payable by the Issuer under this Indenture.  Any amount received or recovered in a currency other than the U.S. dollar in respect

 

76



 

of the Notes (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Guarantor, any Subsidiary or otherwise) by the Holder in respect of any sum expressed to be due to it from the Issuer will constitute a discharge of the Issuer only to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not possible to make that purchase on that date, on the first date on which it is possible to do so).  If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient under any Note, the Issuer will indemnify the recipient against any loss sustained by it as a result.  In any event the Issuer will indemnify the recipient against the cost of making any such purchase.

 

For the purposes of this indemnity, it will be sufficient for the Holder to certify that it would have suffered a loss had an actual purchase of U.S. dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. dollars on such date had not been practicable, on the first date on which it would have been practicable).  These indemnities constitute a separate and independent obligation from the other obligations of the Issuer, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any holder and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any other judgment or order.

 

SECTION 11.15                                     Information .  For so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange, and the rules of such stock exchange so require, copies of this Indenture will be made available in Luxembourg through the offices of the Listing Agent in such city.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, as of the date first written above.

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

By:

/s/ Mark Fawcett

 

Name:

Mark Fawcett

 

Title:

Vice President and Treasurer

 

 

 

 

 

FRESENIUS MEDICAL CARE AG & CO. KGaA,

 

a partnership limited by shares, represented by

 

FRESENIUS MEDICAL CARE MANAGEMENT AG, its general partner

 

 

 

 

 

By:

/s/ Rice Powell

 

Name:

Rice Powell

 

Title

Member of the Management Board

 

 

 

By:

/s/ Michael Brosnan

 

Name

Michael Brosnan

 

Title:

Member of the Management Board

 

 

 

 

 

FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH

 

 

 

 

 

By:

/s/ Marco Kiene

 

Name:

Marco Kiene

 

Title

Managing Director

 

 

 

By:

/s/ Dr. Olaf Schermeier

 

Name

Dr. Olaf Schermeier

 

Title

Managing Director

 

 

 

 

 

FRESENIUS MEDICAL CARE HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Mark Fawcett

 

Name:

Mark Fawcett

 

Title:

Vice President and Treasurer

 

78



 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

 

By:

/s/Melissa A. Dumont

 

Name:

Melissa A. Dumont

 

Title:

Vice President

 

79



 

EXHIBIT A
TO THE INDENTURE

 

[FORM OF FACE OF GLOBAL NOTE]

 

[Global Note Legend]

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE TO THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

[Private Placement Legend]

 

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

 



 

SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

 

A-2



 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.125% Senior Note due 2020

 

CUSIP No.:            

 

No.

$

 

FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”, which term includes any successor entity), for value received, promises to pay to Cede & Co. or its registered assigns upon surrender hereof the principal sum indicated on Schedule A hereof, on October 15, 2020.

 

Interest Payment Dates:  April 15 and October 15, commencing April 15, 2015

 

Record Dates:  April 1 and October 1 immediately preceding the Interest Payment Dates

 

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

 

A-3



 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:

 

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

Trustee’s Certificate of Authentication

 

This is one of the Securities with the Guarantees endorsed thereon referred to in the within-mentioned Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

A-4



 

[FORM OF REVERSE]

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.125% Senior Note due 2020

 

1.                                       Interest .  FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below.  Interest on the Notes will accrue at 4.125% per annum on the principal amount then outstanding, and be payable semi-annually in cash in arrears on each April 15 and October 15, or if any such day is not a Business Day, on the next succeeding Business Day, commencing April 15, 2015, to the Holder hereof.  Notwithstanding any exchange of this Note for a Definitive Note during the period starting on a Record Date relating to such Definitive Note and ending on the immediately succeeding interest payment date, the interest due on such interest payment date shall be payable to the Person in whose name this Global Note is registered at the close of business on the Record Date for such interest.  Interest on the Notes will accrue from the most recent date to which interest has been paid.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

The Issuer shall pay interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) and on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth herein.

 

2.                                       Additional Amounts .  All payments made under or with respect to the Notes under the Indenture or pursuant to any Note Guarantee must be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of (1) the United States, Germany, Luxembourg, the United Kingdom or any political subdivision or governmental authority thereof or therein having the power to tax, (2) any jurisdiction from or through which payment on the Notes or any Note Guarantee is made, or any political subdivision or governmental authority thereof or therein having the power to tax or (3) any other jurisdiction in which the payor is organized or otherwise considered to be a resident or engaged in business for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each a “Relevant Taxing Jurisdiction”), collectively, “Taxes,” unless the Issuer, relevant Guarantor or other applicable withholding agent is required to withhold or deduct Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If the Issuer, any Guarantor or other applicable withholding agent is so required to withhold or deduct any amount for or on account of Taxes from any payment made under or with respect to the Notes or any Note Guarantee, the Issuer or such Guarantor, as the case may be, will be required to pay such amount — “Additional Amounts” — as may be necessary so that the net amount (including Additional Amounts) received by each beneficial owner after such withholding or deduction (including any withholding or deduction on such Additional Amounts) will not be less than the amount such beneficial owner would have received if such Taxes had not been withheld or deducted;

 

A-5


 

provided , however , that no Additional Amounts will be payable with respect to payments made to any beneficial owner to the extent such Taxes are imposed by reason of (i) such beneficial owner being considered to be or to have been connected with a Relevant Taxing Jurisdiction, otherwise than by the acquisition, ownership, holding or disposition of the Notes, the enforcement of rights under the Notes or under any Note Guarantee or the receipt of payments in respect of the Notes or any Note Guarantee, or (ii) such beneficial owner not completing any procedural formalities that it is legally eligible to complete and are necessary for the Issuer, a Guarantor or other applicable withholding agent to make or obtain authorization to make payments without such Taxes (including, without limitation, providing prior to the receipt of any payment on or in respect of a Note or any Note Guarantee, a complete, correct and executed IRS Form W-8 or W-9 or successor form, as applicable, with all appropriate attachments or a comparable form required by another Relevant Taxing Jurisdiction).  Further, no Additional Amounts shall be payable with respect to (i) any Tax on interest imposed by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner holding or owning, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Issuer or any Guarantor entitled to vote, (ii) any Tax on interest imposed by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a controlled foreign corporation that is a related person within the meaning of Section 864(d)(4) of the Code with respect to the Issuer or any Guarantor, (iii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business or (iv) any United States federal tax imposed pursuant to current sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Code”) or any amended or successor version that is substantively comparable and not materially more onerous to comply with (collectively, “FATCA”).  The Issuer or any Guarantor (as applicable) required to withhold any Taxes will make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority as and when required in accordance with applicable law.  The Issuer or any Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment by the Issuer or such Guarantor (as applicable) of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee.

 

No such Additional Amounts shall be payable with respect to the Notes under the Indenture or pursuant to any Note Guarantee where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the EU Savings Directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive.

 

Wherever in the Indenture or the Notes or any Note Guarantee there are mentioned, in any context, (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes under the Indenture or the Notes, (3) interest or (4) any other amount payable on or with respect to any of the Notes or any Note Guarantee, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

A-6



 

At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to herein or therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations in this Paragraph 2 will survive any termination, defeasance or discharge of the Indenture. References in this Paragraph 2 to the Issuer or any Guarantor shall apply to any successor(s) thereto.

 

3.                                       Method of Payment .  The Issuer shall pay interest on the Notes (except defaulted interest) to the Person in whose name this Note is registered at the close of business on the Record Date for such interest. The Issuer shall pay principal and interest in U.S. dollars.  Immediately available funds for the payment of the principal of (and premium, if any), interest and Additional Amounts, if any, on this Note due on any interest payment date, Maturity Date, Redemption Date or other repurchase date will be made available to the Paying Agent to permit the Paying Agent to pay such funds to the Holders on such respective dates.

 

4.                                       Paying Agent and Registrar .  Initially, U.S. Bank National Association will act as Paying Agent and as Registrar.  In the event that a Paying Agent or transfer agent is replaced, the Issuer will provide notice thereof (so long as the Notes are Global Notes) published in a leading newspaper having general circulation in New York City (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg

 

A-7



 

Stock Exchange and the rules of such stock exchange shall so require, published in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (in the case of Definitive Notes), in addition to such publication, mailed by first-class mail to each Holder’s registered address.  The Issuer may change any Registrar without notice to the Holders.  The Issuer, the Company or any of their Subsidiaries may, subject to certain exceptions, act in the capacity of Registrar or transfer agent.

 

5.                                       Indenture .  The Issuer issued the Notes under an Indenture, dated as of October 29, 2014 (the “Indenture”), among the Issuer, Fresenius Medical Care AG & Co. KGaA (the “Company”), Fresenius Medical Care Holdings, Inc. (“FMCH”), Fresenius Medical Care Deutschland GmbH (“FMCD” and together with the Company and FMCH, the “Guarantors”) and U.S. Bank National Association (the “Trustee”) as Trustee.  This Note is one of a duly authorized issue of Notes (as defined in the Indenture) of the Issuer designated as its 4.125% Senior Notes due 2020.  The terms of the Notes include those stated in the Indenture.  Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture for a statement of them.  The Notes are general obligations of the Issuer.  The Notes are not limited in aggregate principal amount and Additional Notes (as defined in the Indenture) may be issued from time to time under the Indenture, in each case subject to the terms of the Indenture; provided that the aggregate principal amount of Notes that will be issued on the Closing Date (as defined in the Indenture) will not exceed $500,000,000.  Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

 

6.                                       Ranking .  The Notes will be senior unsecured obligations of the Issuer and the Note Guarantees will be senior unsecured obligations of the Guarantors. The payment of the principal of, premium, if any, and interest on the Notes and the obligations of the Guarantors under the Note Guarantees will:

 

·                   rank pari passu in right of payment with all other Indebtedness of the Issuer and the Guarantors, as applicable, that is not by its terms expressly subordinated to other Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   rank senior in right of payment to all Indebtedness of the Issuer and the Guarantors, as applicable, that is, by its terms, expressly subordinated to the senior Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   be effectively subordinated to the Secured Indebtedness of the Issuer and the Guarantors, as applicable, to the extent of the value of the collateral securing such Indebtedness, and to the Indebtedness of the Subsidiaries that are not Guarantors of the Notes; and

 

·                   in the case of the Note Guarantee of Fresenius Medical Care Deutschland GmbH, be effectively subordinated to the claims of such Guarantor’s

 

A-8



 

third-party creditors as a result of limitations applicable to the Note Guarantee as set forth in Section 10.1(c) of the Indenture.

 

7.                                       Note Guarantee As provided in the Indenture and subject to certain limitations set forth therein, the obligations of the Issuer under the Indenture and this Note are Guaranteed on a senior unsecured basis pursuant to Note Guarantees endorsed hereon.  The Indenture provides that a Guarantor shall be released from its Note Guarantee upon compliance with certain conditions.

 

8.                                       Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at redemption prices equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)                                  as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)                                  100% of the principal amount of the Notes being redeemed.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2020 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to beneficial Holders whose Notes will be subject to redemption by the Issuer.

 

In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of $2,000 in original principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.

 

9.                                       Special Tax Redemption .  The Issuer is entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become

 

A-9



 

obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

(a)                                  a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

(b)                                  any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes (or, if the applicable Relevant Taxing Jurisdiction did not become a Relevant Taxing Jurisdiction until a later date, after such later date); provided that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

10.                                Notice of Redemption .  Notice of redemption will be given at least 30 days but not more than 60 days before the Redemption Date or Tax Redemption Date, as the case may be, (i) so long as the Notes are in global form, by publishing in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable and (ii) in the case of Definitive Notes, in addition to such publication, by mailing first-class mail to each Holder’s registered address.  Notes in denominations of $2,000 may be redeemed only in whole.  The Trustee may select for redemption portions (equal to $2,000 or any integral multiple of $1,000 in excess thereof) of the principal of Notes that have denominations larger than $2,000.

 

Except as set forth in the Indenture, from and after any Redemption Date or Tax Redemption Date, as the case may be, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date or Tax Redemption Date, as the case may be, then, unless the Issuer defaults in the payment of such Redemption Price, the Notes called for redemption will cease to bear interest and Additional Amounts, if any, and the only right of the Holders of such Notes will be to receive payment of the Redemption Price.

 

11.                                Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus

 

A-10



 

accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).  Holders of Notes that are subject to an offer to purchase will receive a Change of Control offer from the Company prior to any related Change of Control payment date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” appearing below.

 

12.                                Denominations; Form .  The Global Notes are in registered global form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

13.                                Persons Deemed Owners .  The registered Holder of this Note shall be treated as the owner of it for all purposes, subject to the terms of the Indenture.

 

14.                                Unclaimed Funds .  If funds for the payment of principal, interest, premium or Additional Amounts remain unclaimed for two years, the Trustee and the Paying Agents will repay the funds to the Issuer at its written request.  After that, all liability of the Trustee and such Paying Agents with respect to such funds shall cease.

 

15.                                Legal Defeasance and Covenant Defeasance .  The Issuer may be discharged from its obligations under the Indenture and the Notes except for certain provisions thereof (“Legal Defeasance”), and may be discharged from its obligations to comply with certain covenants contained in the Indenture (“Covenant Defeasance”), in each case upon satisfaction of certain conditions specified in the Indenture.

 

16.                                Amendment; Supplement; Waiver .  Subject to certain exceptions specified in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding.

 

17.                                Restrictive Covenants .  The Indenture imposes certain covenants that, among other things, limit the ability of the Issuer, the Company, the Guarantors and their Subsidiaries to incur additional Indebtedness, to incur additional Liens, to enter into Sale and Leaseback Transactions and enter into certain consolidations or mergers.  The limitations are subject to a number of important qualifications and exceptions.  The Issuer must annually report to the Trustee on compliance with such limitations.

 

18.                                Successors .  When a successor assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

 

19.                                Defaults and Remedies .  If an Event of Default (other than an Event of Default specified in clause (7) of Section 6.1 of the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture.  Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to enforce the Indenture or the Notes unless it has

 

A-11



 

received full indemnity.  The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal, premium, interest and Additional Amounts, if any, including an accelerated payment) if it determines that withholding notice is in their interest.

 

20.                                Trustee Dealings with Issuer .  The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

 

21.                                No Recourse Against Others .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, Fresenius SE’s general partner, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.  The waiver and release are part of the consideration for issuance of the Notes.

 

22.                                Authentication .  This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Note.

 

23.                                Abbreviations and Defined Terms .  Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).  Unless otherwise defined herein, terms defined in the Indenture are used herein as defined therein.

 

24.                                CUSIP Numbers .  The Issuer will cause the CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

 

25.                                Governing Law .  THIS NOTE AND THE INDENTURE, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT CERTAIN MATTERS CONCERNING LIMITATION THEREOF WILL BE

 

A-12



 

CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

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SCHEDULE A

 

SCHEDULE OF PRINCIPAL AMOUNT

 

The initial principal amount at maturity of this Note shall be $[principal amount].  The following decreases/increases in the principal amount at maturity of this Note have been made:

 

Date of
Decrease/
Increase

 

Decrease in
Principal
Amount

 

Increase in
Principal
Amount

 

Total Principal
Amount
Following Such
Decrease/
Increase

 

Notation
Made by
or on
Behalf of
Trustee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-14



 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, check the box below:

 

o

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, state the amount:  $

 

Date:

 

 

 

 

 

 

 

Your Signature:

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

 

 

 

Signature Guarantee:

 

 

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

 

 

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EXHIBIT B
TO THE INDENTURE

 

[FORM OF FACE OF DEFINITIVE NOTE]

 

THIS NOTE IS A DEFINITIVE NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO.

 

[Private Placement Legend]

 

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

 

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FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.125% Senior Note due 2020

 

CUSIP No.:      

 

No.

$

 

FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”, which term includes any successor entity), for value received, promises to pay to [                         ] or its registered assigns upon surrender hereof the principal sum of $                      , on October 15, 2020.

 

Interest Payment Dates:  April 15 and October 15, commencing April 15, 2015

 

Record Dates:  April 1 and October 1 immediately preceding the Interest Payment Dates

 

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

 

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:

 

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

Trustee’s Certificate of Authentication

 

This is one of the Securities with the Guarantees endorsed thereon referred to in the within-mentioned Indenture.

 

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

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[FORM OF REVERSE]

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.125% Senior Note due 2020

 

1.                                       Interest .  FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below.  Interest on the Notes will accrue at 4.125% per annum on the principal amount then outstanding, and be payable semi-annually in cash in arrears on each April 15 and October 15, or if any such day is not a Business Day, on the next succeeding Business Day, commencing April 15, 2015, to the Holder hereof.  Notwithstanding any exchange of this Note for a Definitive Note during the period starting on a Record Date relating to such Definitive Note and ending on the immediately succeeding interest payment date, the interest due on such interest payment date shall be payable to the Person in whose name this Global Note is registered at the close of business on the Record Date for such interest.  Interest on the Notes will accrue from the most recent date to which interest has been paid.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

The Issuer shall pay interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) and on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth herein.

 

2.                                       Additional Amounts .  All payments made under or with respect to the Notes under the Indenture or pursuant to any Note Guarantee must be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of (1) the United States, Germany, Luxembourg, the United Kingdom or any political subdivision or governmental authority thereof or therein having the power to tax, (2) any jurisdiction from or through which payment on the Notes or any Note Guarantee is made, or any political subdivision or governmental authority thereof or therein having the power to tax or (3) any other jurisdiction in which the payor is organized or otherwise considered to be a resident or engaged in business for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each a “Relevant Taxing Jurisdiction”), collectively, “Taxes,” unless the Issuer, relevant Guarantor or other applicable withholding agent is required to withhold or deduct Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If the Issuer, any Guarantor or other applicable withholding agent is so required to withhold or deduct any amount for or on account of Taxes from any payment made under or with respect to the Notes or any Note Guarantee, the Issuer or such Guarantor, as the case may be, will be required to pay such amount — “Additional Amounts” — as may be necessary so that the net amount (including Additional Amounts) received by each beneficial owner after such withholding or deduction (including any withholding or deduction on such Additional Amounts) will not be less than the amount such beneficial owner would have received if such Taxes had not been withheld or deducted; provided , however , that no Additional Amounts will be payable with respect to payments made to any beneficial owner to the extent such Taxes are imposed by reason of (i) such beneficial

 

B-1



 

owner being considered to be or to have been connected with a Relevant Taxing Jurisdiction, otherwise than by the acquisition, ownership, holding or disposition of the Notes, the enforcement of rights under the Notes or under any Note Guarantee or the receipt of payments in respect of the Notes or any Note Guarantee, or (ii) such beneficial owner not completing any procedural formalities that it is legally eligible to complete and are necessary for the Issuer, a Guarantor or other applicable withholding agent to make or obtain authorization to make payments without such Taxes (including, without limitation, providing prior to the receipt of any payment on or in respect of a Note or any Note Guarantee, a complete, correct and executed IRS Form W-8 or W-9 or successor form, as applicable, with all appropriate attachments or a comparable form required by another Relevant Taxing Jurisdiction).  Further, no Additional Amounts shall be payable with respect to (i) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner holding or owning, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Issuer or any Guarantor entitled to vote, (ii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a controlled foreign corporation that is a related person within the meaning of Section 864(d)(4) of the Code with respect to the Issuer or any Guarantor, (iii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business or (iv) any United States federal tax imposed pursuant to current sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Code”) or any amended or successor version that is substantively comparable and not materially more onerous to comply with (collectively, “FATCA”).  The Issuer or any Guarantor (as applicable) required to withhold any Taxes will make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority as and when required in accordance with applicable law.  The Issuer or any Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment by the Issuer or such Guarantor (as applicable) of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee.

 

No such Additional Amounts shall be payable with respect to the Notes under the Indenture or pursuant to any Note Guarantee where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the EU Savings Directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive.

 

Wherever in the Indenture or the Notes or any Note Guarantee there are mentioned, in any context, (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes under the Indenture or the Notes, (3) interest or (4) any other amount payable on or with respect to any of the Notes or any Note Guarantee, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it

 

B-2



 

shall be promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to herein or therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations in this Paragraph 2 will survive any termination, defeasance or discharge of the Indenture. References in this Paragraph 2 to the Issuer or any Guarantor shall apply to any successor(s) thereto.

 

3.                                       Method of Payment .  The Issuer shall pay interest on the Notes (except defaulted interest) to the Person in whose name this Note is registered at the close of business on the Record Date for such interest.  Holders must surrender Notes to a Paying Agent to collect principal payments.  The Issuer shall pay principal and interest in U.S. dollars.  Immediately available funds for the payment of the principal of (and premium, if any), interest and Additional Amounts, if any, on this Note due on any interest payment date, Maturity Date, Redemption Date or other repurchase date will be made available to the Paying Agent to permit the Paying Agent to pay such funds to the Holders on such respective dates.

 

4.                                       Paying Agent and Registrar .  Initially, U.S. Bank National Association will act as Paying Agent and as Registrar.  In the event that a Paying Agent or transfer agent is replaced, the Issuer will provide notice thereof (so long as the Notes are Global Notes) published in a leading newspaper having general circulation in New York City (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, published in a newspaper having a general circulation in Luxembourg (which is expected to be the

 

B-3



 

Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (in the case of Definitive Notes), in addition to such publication, mailed by first-class mail to each Holder’s registered address.  The Issuer may change any Registrar without notice to the Holders.  The Issuer, the Company or any of their Subsidiaries may, subject to certain exceptions, act in the capacity of Registrar or transfer agent.

 

5.                                       Indenture .  The Issuer issued the Notes under an Indenture, dated as of October 29, 2014 (the “Indenture”), among the Issuer, Fresenius Medical Care AG & Co. KGaA (the “Company”), Fresenius Medical Care Holdings, Inc. (“FMCH”), Fresenius Medical Care Deutschland GmbH (“FMCD” and together with the Company and FMCH, the “Guarantors”) and U.S. Bank National Association (the “Trustee”) as Trustee.  This Note is one of a duly authorized issue of Notes (as defined in the Indenture) of the Issuer designated as its 4.125% Senior Notes due 2020.  The terms of the Notes include those stated in the Indenture.  Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture for a statement of them.  The Notes are general obligations of the Issuer.  The Notes are not limited in aggregate principal amount and Additional Notes (as defined in the Indenture) may be issued from time to time under the Indenture, in each case subject to the terms of the Indenture; provided that the aggregate principal amount of Notes that will be issued on the Closing Date (as defined in the Indenture) will not exceed $500,000,000.  Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

 

6.                                       Ranking .  The Notes will be senior unsecured obligations of the Issuer and the Note Guarantees will be senior unsecured obligations of the Guarantors. The payment of the principal of, premium, if any, and interest on the Notes and the obligations of the Guarantors under the Note Guarantees will:

 

·                   rank pari passu in right of payment with all other Indebtedness of the Issuer and the Guarantors, as applicable, that is not by its terms expressly subordinated to other Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   rank senior in right of payment to all Indebtedness of the Issuer and the Guarantors, as applicable, that is, by its terms, expressly subordinated to the senior Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   be effectively subordinated to the Secured Indebtedness of the Issuer and the Guarantors, as applicable, to the extent of the value of the collateral securing such Indebtedness, and to the Indebtedness of the Subsidiaries that are not Guarantors of the Notes; and

 

·                   in the case of the Note Guarantee of Fresenius Medical Care Deutschland GmbH, be effectively subordinated to the claims of such Guarantor’s third-party creditors as a result of limitations applicable to the Note Guarantee as set forth in Section 10.1(c) of the Indenture.

 

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7.                                       Note Guarantee As provided in the Indenture and subject to certain limitations set forth therein, the obligations of the Issuer under the Indenture and this Note are Guaranteed on a senior unsecured basis pursuant to Note Guarantees endorsed hereon.  The Indenture provides that a Guarantor shall be released from its Note Guarantee upon compliance with certain conditions.

 

8.                                       Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at redemption prices equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)                                  as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)                                  100% of the principal amount of the Notes being redeemed.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2020 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to beneficial Holders whose Notes will be subject to redemption by the Issuer.

 

In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of $2,000 in original principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.

 

9.                                       Special Tax Redemption .  The Issuer is entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

B-5



 

(a)                                  a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

(b)                                  any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes (or, if the applicable Relevant Taxing Jurisdiction did not become a Relevant Taxing Jurisdiction until a later date, after such later date); provided that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

10.                                Notice of Redemption .  Notice of redemption will be given at least 30 days but not more than 60 days before the Redemption Date or Tax Redemption Date, as the case may be, (i) so long as the Notes are in global form, by publishing in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable and (ii) in the case of Definitive Notes, in addition to such publication, by mailing first-class mail to each Holder’s registered address.  Notes in denominations of $2,000 may be redeemed only in whole.  The Trustee may select for redemption portions (equal to $2,000 or any integral multiple of $1,000 in excess thereof) of the principal of Notes that have denominations larger than $2,000.

 

Except as set forth in the Indenture, from and after any Redemption Date or Tax Redemption Date, as the case may be, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date or Tax Redemption Date, as the case may be, then, unless the Issuer defaults in the payment of such Redemption Price, the Notes called for redemption will cease to bear interest and Additional Amounts, if any, and the only right of the Holders of such Notes will be to receive payment of the Redemption Price.

 

11.                                Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).  Holders of Notes that are subject to an offer to purchase will receive a Change of Control offer

 

B-6



 

from the Company prior to any related Change of Control payment date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” appearing below.

 

12.                                Denominations; Form .  The Global Notes are in registered global form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

13.                                Persons Deemed Owners .  The registered Holder of this Note shall be treated as the owner of it for all purposes, subject to the terms of the Indenture.

 

14.                                Unclaimed Funds .  If funds for the payment of principal, interest, premium or Additional Amounts remain unclaimed for two years, the Trustee and the Paying Agents will repay the funds to the Issuer at its written request.  After that, all liability of the Trustee and such Paying Agents with respect to such funds shall cease.

 

15.                                Legal Defeasance and Covenant Defeasance .  The Issuer may be discharged from its obligations under the Indenture and the Notes except for certain provisions thereof (“Legal Defeasance”), and may be discharged from its obligations to comply with certain covenants contained in the Indenture (“Covenant Defeasance”), in each case upon satisfaction of certain conditions specified in the Indenture.

 

16.                                Amendment; Supplement; Waiver .  Subject to certain exceptions specified in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding.

 

17.                                Restrictive Covenants .  The Indenture imposes certain covenants that, among other things, limit the ability of the Issuer, the Company, the Guarantors and their Subsidiaries to incur additional Indebtedness, to incur additional Liens, to enter into Sale and Leaseback Transactions and enter into certain consolidations or mergers.  The limitations are subject to a number of important qualifications and exceptions.  The Issuer must annually report to the Trustee on compliance with such limitations.

 

18.                                Successors .  When a successor assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

 

19.                                Defaults and Remedies .  If an Event of Default (other than an Event of Default specified in clause (7) of Section 6.1 of the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture.  Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to enforce the Indenture or the Notes unless it has received full indemnity.  The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of Notes

 

B-7


 

notice of any continuing Default or Event of Default (except a Default in payment of principal, premium, interest and Additional Amounts, if any, including an accelerated payment) if it determines that withholding notice is in their interest.

 

20.          Trustee Dealings with Issuer .  The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

 

21.          No Recourse Against Others .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, Fresenius SE’s general partner, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.  The waiver and release are part of the consideration for issuance of the Notes.

 

22.          Authentication .  This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Note.

 

23.          Abbreviations and Defined Terms .  Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).  Unless otherwise defined herein, terms defined in the Indenture are used herein as defined therein.

 

24.          CUSIP Numbers .  The Issuer will cause the CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

 

25.          Governing Law .  THIS NOTE AND THE INDENTURE, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT CERTAIN MATTERS CONCERNING LIMITATION THEREOF WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

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ASSIGNMENT FORM

 

To assign this Note fill in the form below:

 

I or we assign and transfer this Note to

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint                          agent to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.

 

Date: 

 

 

Your Signature: 

 

 

 

Sign exactly as your name appears on the other side of this Note.

 

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OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, check the box below:

 

o

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, state the amount: $

 

Date: 

 

 

 

 

Your Signature: 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

Signature Guarantee: 

 

 

Participant in a recognized Signature Guarantee Medallion Program
(or other signature guarantor program reasonably acceptable to the Trustee)

 

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EXHIBIT C

TO THE INDENTURE

 

FORM OF NOTE GUARANTEE

 

For value received, each of the Guarantors hereby jointly and severally, irrevocably and unconditionally Guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, call for redemption, purchase or otherwise, in accordance with the terms of such Note and of the Indenture.

 

In case of the failure of the Issuer punctually to make any such payment, each of the Guarantors hereby jointly and severally agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by acceleration, call for redemption, purchase or otherwise, and as if such payment were made by the Issuer.  The Note Guarantee extends to the Issuer’s repurchase obligations arising from a Change of Control pursuant to the Indenture.

 

Each of the Guarantors hereby jointly and severally agrees that its obligations hereunder shall be irrevocable and unconditional, irrespective of the validity, regularity or enforceability of such Note or the Indenture, the absence of any action to enforce the same, any exchange, release or non-perfection of any Lien on any collateral for, or any release or amendment or waiver of any term of any other Guarantee of, or any consent to departure from any requirement of any other Guarantee of, all or any of the Notes, the effects of Bankruptcy Law applicable in the event of bankruptcy proceedings being opened with respect to the Issuer, of all or any portion of the claims of the Trustee or any of the Holders for payment of any of the Notes, any waiver or consent by the Holder of such Note or by the Trustee with respect to any provisions thereof or of the Indenture, the obtaining of any judgment against the Issuer or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each of the Guarantors hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Issuer or any other Person or any collateral, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Note Guarantee.  Each of the Guarantors hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest (including Additional Amounts, if any) on such Note, whether at its Stated Maturity, by acceleration, call for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in the Indenture, directly against each of the Guarantors to enforce this Note Guarantee without first

 

C-1



 

proceeding against the Issuer.  Each Guarantor agrees that, to the extent permitted by applicable law, if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders is prevented by applicable law from exercising its respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, or the Trustee or the Holders are prevented from taking any action to realize on any collateral, such Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

 

No reference herein to the Indenture and no provision of this Note Guarantee or of the Indenture shall alter or impair the Note Guarantee of any Guarantor, which is absolute and unconditional, of the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on the Note upon which this Note Guarantee is endorsed.

 

This Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation or reorganization, or equivalent proceeding under applicable law, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, or the equivalent of any of the foregoing under applicable law, and shall, to the fullest extent permitted by applicable law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes whether as a voidable preference, fraudulent transfer, or as otherwise provided under similar laws affecting the rights of creditors generally or under applicable laws of the jurisdiction of formation of the Issuer, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by applicable law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under this Note Guarantee.  The Guarantors or any particular Guarantor shall be released from this Note Guarantee upon the terms and subject to certain conditions provided in the Indenture.

 

By delivery of a supplemental indenture to the Trustee in accordance with the terms of the Indenture or the execution of a Guarantee Agreement, each Person that becomes, or assumes the obligations of, a Guarantor after the date of the Indenture will be deemed to have executed and delivered this Note Guarantee for the benefit of the Holder of this Note with the same effect as if such Guarantor were named below.

 

All terms used in this Note Guarantee which are defined in the Indenture referred to in the Note upon which this Note Guarantee is endorsed shall have the meanings assigned to them in such Indenture.

 

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This Note Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Note Guarantee is endorsed shall have been executed by the Trustee under the Indenture by manual signature.

 

Each Note Guarantee (other than that of the Company) will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Note Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally or under applicable law of the jurisdiction of incorporation of such Guarantor.

 

In the case of Fresenius Medical Care Deutschland GmbH (“FMCD”), the following provisions apply:

 

(i)            Without limiting the agreements set forth in Section 11.8 of the Indenture, this Note Guarantee of FMCD will be limited if and to the extent payment under such Note Guarantee or the application of enforcement proceeds would cause (x) FMCD’s net assets ( Reinvermögen - calculated as the sum of the balance sheet positions shown under § 266(2)(A), (B) and (C) German Commercial Code ( Handelsgesetzbuch )) less the sum of the liabilities (shown under the balance sheet positions pursuant to § 266(3)(B), (C) and (D) German Commercial Code) to fall below FMCD’s registered share capital ( Stammkapital ) or (y) (if the amount of the net assets is already an amount less than the registered share capital) cause such amount to be further reduced and, in either case, thereby affecting the assets required for the obligatory preservation of its registered share capital according to section 30, 31 of the German Limited Liability Company Act ( GmbHG ) (such event a “Capital Impairment”).  For the purposes of calculating the Capital Impairment, the following adjustments will be made:  (x) the amount of any increase of the registered share capital out of retained earnings ( Kapitalerhöhung aus Gesellschaftsmitteln ) after the Closing Date that has been effected without the prior consent of the Trustee shall be deducted from the registered share capital; and (y) liabilities incurred in violation of the provisions of the Notes and this Indenture shall be disregarded. In the event FMCD’s net assets fall below its registered share capital, FMCD, upon request of the Trustee will realize in due course, to the extent legally permitted, any and all of its assets that are shown in the balance sheet with a book value ( Buchwert ) that is significantly lower than the market value of the assets if the relevant assets are not necessary for FMCD’s business ( nicht betriebsnotwendiges Vermögen ).

 

(ii)           If FMCD objects to the amount demanded by the Trustee under this Note Guarantee within twenty (20) business days after the Trustee has submitted to FMCD a payment demand FMCD shall appoint within five (5) business days a reputable international auditor to determine the exact amount. The auditor shall notify FMCD and the Trustee of the maximum amount payable under this Note Guarantee within forty (40) business days after its appointment. The costs of such auditor’s determination shall be borne by FMCD. The determination of the auditor shall be binding for FMCD, and the Holders (except for manifest error). To the extent that any payment has been made under this Note Guarantee by FMCD that would be necessary for FMCD to be able to cure any Capital Impairment or Liquidity Impairment such payment shall immediately — upon

 

C-3



 

FMCD’s demand — be returned to FMCD by any person receiving such payment, provided, however, in no event shall the Trustee or Paying Agent have any responsibility or liability for the return of any amount distributed to any Holder or beneficial owner of the Notes by the Trustee or Paying Agent, including, without limitation, any obligation to seek return of such amounts from such Holder or beneficial owner.

 

(iii)          If (x) FMCD does not object to the payment amount within the 20 business days period or (y) if FMCD does not appoint the auditor within the 5 business days period or (z) if the auditor fails to notify the amount payable within the 40 days period, then the Trustee shall be entitled to enforce this Note Guarantee without further delay. The burden of demonstration and proof ( Darlegungs- und Beweislast ) regarding the Capital Impairment and the maximum amount payable under this Note Guarantee shall remain with FMCD.

 

(iv)          The maximum amount payable under the guarantee shall be limited to the extent and as long as FMCD as a consequence of the payment would become unable to pay its debts when due ( zahlungsunfähig ) within the meaning of section 64 GmbHG (such event a “Liquidity Impairment”). For the purpose of establishing whether a Liquidity Impairment would occur, payments made by FMCD after the Trustee has notified FMCD of its intention to enforce this Note Guarantee with respect to payment obligations that are not due at the time of the payment shall be disregarded, unless the Trustee has consented to such payments (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding). From the time the Trustee has notified FMCD and the Company of its intention to enforce this Note Guarantee, the Company may not make any payment demands against FMCD under shareholder loans and all such payment obligations of FMCD towards the Company shall be deferred, subordinated or waived as the Company sees fit, until the Trustee notifies FMCD that it is no longer enforcing this Note Guarantee or the Trustee consents (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding) to the payments to be made to the Company. Such notice may be delivered by the Trustee at any time and, if not previously delivered, will be delivered by the Trustee after the Notes have been repaid in full and all other obligations under this Indenture are satisfied.

 

(v)           The limitations as to the Capital Impairment shall not apply to the extent FMCD has an adequate compensation claim ( vollwertiger Gegenleistungs- oder Rückgewähranspruch ) against the Company that compensates for any loss incurred due to any payment by FMCD under this Note Guarantee.

 

The limitations in the preceding paragraphs (i) through (v), inclusive, shall apply mutatis mutandis to the direct and indirect shareholders of FMCD (other than the Company) if and to the extent the enforcement of the Notes Guarantees constitutes a payment ( Auszahlung ) by the relevant shareholders of FMCD within the meaning of section 30 of the German Limited Liability Company Act ( GmbHG ).

 

The obligations of each Guarantor to the Holders of the Notes and to the Trustee pursuant to this Note Guarantee and the Indenture are expressly set forth in Article X of the Indenture

 

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and reference is made to Article X of the Indenture for further provisions with respect to this Note Guarantee.

 

THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE LIMITATIONS OF THE NOTE GUARANTEES EXPRESSED IN SECTION 10.1(c) OF THE INDENTURE (AND THE EQUIVALENT PROVISIONS IN THE ELEVENTH PARAGRAPH HEREOF) WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

C-5



 

IN WITNESS WHEREOF, each of the undersigned has caused this Note Guarantee to be duly executed.

 

 

FRESENIUS MEDICAL CARE AG & CO. KGaA, a partnership limited by shares and represented by FRESENIUS MEDICAL CARE MANAGEMENT AG, its general partner, as Guarantor

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE DEUTSCHLAND GMBH, as Guarantor

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

FRESENIUS MEDICAL CARE HOLDINGS, INC., as Guarantor

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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EXHIBIT D
TO THE INDENTURE

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Transfers pursuant to Section 2.7(a) of the Indenture)

 

Fresenius Medical Care US Finance II, Inc.
c/o U.S. Bank National Association
225 Asylum Street, 23rd Floor

Hartford, CT 06103

 

Attention:                                          Corporate Trust and Agency Services

Melissa Dumont

 

RE:                            4.125% Senior Notes due 2020
(the “Notes”) of Fresenius Medical Care US Finance II, Inc .

 

Reference is hereby made to the Indenture dated as of October 29, 2014 (the “Indenture”) among Fresenius Medical Care US Finance II, Inc., Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Holdings, Inc., Fresenius Medical Care Deutschland GmbH, and U.S. Bank National Association, as Trustee.  Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

 

This letter relates to $                   (being in a minimum amount of $2,000 and any integral multiple of $1,000 in excess thereof) principal amount of Notes beneficially held through interests in the Rule 144A Global Note (CUSIP No. 35802XAH6) with DTC in the name of                 (the “Transferor”), account number                 .  The Transferor hereby requests that on [INSERT DATE] such beneficial interest in the Rule 144A Global Note be transferred or exchanged for an interest in the Regulation S Global Note (CUSIP No. U31434AD2) in the same principal denomination and transferred to                    (account no.                 ).  If this is a partial transfer, a minimum amount of $2,000 and any integral multiple of $1,000 in excess thereof of the Rule 144A Global Note will remain outstanding.

 

In connection with such request and in respect of such Notes, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and the Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S under the Securities Act, and accordingly the Transferor further certifies that:

 

(A)          (1)           the offer of the Notes was not made to a Person in the United States;

 

                (2)           either (a) at the time the buy order was originated, the transferee was outside the United States or we and any Person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was

 

D-1



 

executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any Person acting on our behalf knows that the transaction was prearranged with a buyer in the United States;

 

                (3)           no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(a) of Regulation S, as applicable; and

 

                (4)           the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

OR

 

(B)          such transfer is being made in accordance with Rule 144 under the Securities Act.

 

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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.  Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act.

 

Dated: 

 

 

 

 

 

 

[Name of Transferor]

 

 

 

 

 

 

By: 

 

 

 

Name:

 

 

Title:

 

 

Telephone No.:

 

 

Please print name and address (including zip code number) 

 

 

 

 

 

 

D-3



 

EXHIBIT E
TO THE INDENTURE

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Transfers pursuant to Section 2.7(b) of the Indenture)

 

Fresenius Medical Care US Finance II, Inc.
c/o U.S. Bank National Association
225 Asylum Street, 23rd Floor

Hartford, CT 06103

 

Attention:

Corporate Trust and Agency Services

 

Melissa Dumont

 

RE:                            4.125% Senior Notes due 2020
(the “Notes”) of Fresenius Medical Care US Finance II, Inc .

 

Reference is hereby made to the Indenture dated as of October 29, 2014 (the “ Indenture ”) among Fresenius Medical Care US Finance II, Inc., Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Holdings, Inc., Fresenius Medical Care Deutschland GmbH, and U.S. Bank National Association, as Trustee.  Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

 

This letter relates to $                     (being in a minimum amount of $2,000 and in an integral multiple of $1,000 in excess thereof) principal amount of Notes beneficially held through interests in the Regulation S Global Note (CUSIP No. U31434AD2) with DTC in the name of                                (the “Transferor”), account number                   .  The Transferor hereby requests that on [INSERT DATE] such beneficial interest in the Regulation S Global Note be transferred or exchanged for an interest in the Rule 144A Global Note (CUSIP No. 35802XAH6) in the same principal denomination and transferred to                              (account no.                 ).  If this is a partial transfer, a minimum of $2,000 and any integral multiple of $1,000 in excess thereof of the Regulation S Global Note will remain outstanding.

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with Rule 144A under the Securities Act to a transferee that the Transferor knows or reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

 

E-1



 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

Dated: 

 

 

 

 

 

[Name of Transferor]

 

 

 

 

 

 

 

By: 

 

 

 

Name:

 

 

Title:

 

 

Telephone No.:

 

Please print name and address (including zip code number) 

 

 

 

 

 

 

E-2




Exhibit 10.3

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.
as Issuer

 

U.S. BANK NATIONAL ASSOCIATION
as Trustee

 

FRESENIUS MEDICAL CARE AG & Co. KGaA,

FRESENIUS MEDICAL CARE HOLDINGS, INC. and

FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH
as Guarantors

 

INDENTURE

 

DATED AS OF OCTOBER 29, 2014

 

with respect to the issuance of

 

$400,000,000 4.75% SENIOR NOTES DUE 2024

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

 

SECTION 1.1

Definitions

1

SECTION 1.2

Rules of Construction

21

SECTION 1.3

Incorporation by Reference of Trust Indenture Act

21

 

 

 

ARTICLE II

 

THE NOTES

 

 

 

SECTION 2.1

Form and Dating

22

SECTION 2.2

Execution and Authentication

23

SECTION 2.3

Registrar and Paying Agent

24

SECTION 2.4

Paying Agent To Hold Assets in Trust

25

SECTION 2.5

List of Holders

25

SECTION 2.6

Book-Entry Provisions for Global Notes

25

SECTION 2.7

Registration of Transfer and Exchange

26

SECTION 2.8

Replacement Notes

31

SECTION 2.9

Outstanding Notes

31

SECTION 2.10

Treasury Notes

32

SECTION 2.11

Temporary Notes

32

SECTION 2.12

Cancellation

32

SECTION 2.13

Defaulted Interest

33

SECTION 2.14

CUSIP Numbers

33

SECTION 2.15

Deposit of Moneys

33

SECTION 2.16

Certain Matters Relating to Global Notes

33

SECTION 2.17

Record Date

34

 

 

 

ARTICLE III

 

REDEMPTION

 

 

 

SECTION 3.1

Optional Redemption

34

SECTION 3.2

Notices to Trustee

34

SECTION 3.3

Selection of Notes To Be Redeemed

34

SECTION 3.4

Notice of Redemption

35

SECTION 3.5

Effect of Notice of Redemption

36

SECTION 3.6

Deposit of Redemption Price

36

SECTION 3.7

Notes Redeemed in Part

37

SECTION 3.8

Special Tax Redemption

37

 

i



 

 

 

Page

 

 

 

ARTICLE IV

 

COVENANTS

 

 

 

SECTION 4.1

Payment of Notes

38

SECTION 4.2

Maintenance of Office or Agency

38

SECTION 4.3

Limitation on Incurrence of Indebtedness

39

SECTION 4.4

Limitation on Liens

41

SECTION 4.5

Ownership of the Issuer

41

SECTION 4.6

Existence

41

SECTION 4.7

Maintenance of Properties

41

SECTION 4.8

Payment of Taxes and Other Claims

42

SECTION 4.9

Maintenance of Insurance

42

SECTION 4.10

Reports

42

SECTION 4.11

Change of Control

43

SECTION 4.12

Additional Amounts

45

SECTION 4.13

Compliance Certificate; Notice of Default

46

SECTION 4.14

Limitation on Sale and Leaseback Transactions

46

 

 

 

ARTICLE V

 

SUCCESSOR ISSUER OR GUARANTOR

 

 

 

SECTION 5.1

Limitation on Mergers and Sales of Assets

47

SECTION 5.2

Successor Entity Substituted

47

SECTION 5.3

Substitution of the Issuer

48

 

 

 

ARTICLE VI

 

DEFAULT AND REMEDIES

 

 

 

SECTION 6.1

Events of Default

49

SECTION 6.2

Acceleration

50

SECTION 6.3

Other Remedies

50

SECTION 6.4

The Trustee May Enforce Claims Without Possession of Notes

50

SECTION 6.5

Rights and Remedies Cumulative

51

SECTION 6.6

Delay or Omission Not Waiver

51

SECTION 6.7

Waiver of Past Defaults

51

SECTION 6.8

Control by Majority

51

SECTION 6.9

Limitation on Suits

52

SECTION 6.10

Rights of Holders To Receive Payment

52

SECTION 6.11

Collection Suit by Trustee

52

SECTION 6.12

Trustee May File Proofs of Claim

52

SECTION 6.13

Priorities

53

SECTION 6.14

Restoration of Rights and Remedies

53

SECTION 6.15

Undertaking for Costs

53

SECTION 6.16

Notices of Default

54

 

ii



 

 

 

Page

 

 

 

ARTICLE VII

 

TRUSTEE

 

 

 

SECTION 7.1

Duties of Trustee

54

SECTION 7.2

Rights of Trustee

55

SECTION 7.3

Individual Rights of Trustee

56

SECTION 7.4

Trustee’s Disclaimer

56

SECTION 7.5

Notice of Default

56

SECTION 7.6

Reports by Trustee to Holders of the Notes

57

SECTION 7.7

Compensation and Indemnity

57

SECTION 7.8

Replacement of Trustee

58

SECTION 7.9

Successor Trustee by Merger, Etc.

59

SECTION 7.10

Eligibility; Disqualification

59

SECTION 7.11

Preferential Collection of Claims Against the Company

60

 

 

 

ARTICLE VIII

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

 

 

SECTION 8.1

Option To Effect Legal Defeasance or Covenant Defeasance

60

SECTION 8.2

Legal Defeasance and Discharge

60

SECTION 8.3

Covenant Defeasance

61

SECTION 8.4

Conditions to Legal or Covenant Defeasance

61

SECTION 8.5

Satisfaction and Discharge of Indenture

62

SECTION 8.6

Survival of Certain Obligations

63

SECTION 8.7

Acknowledgment of Discharge by Trustee

63

SECTION 8.8

Application of Trust Moneys

63

SECTION 8.9

Repayment to the Issuer; Unclaimed Money

63

SECTION 8.10

Reinstatement

64

 

 

 

ARTICLE IX

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

 

 

SECTION 9.1

Without Consent of Holders of Notes

64

SECTION 9.2

With Consent of Holders of Notes

65

SECTION 9.3

Notice of Amendment, Supplement or Waiver

66

SECTION 9.4

Revocation and Effect of Consents

66

SECTION 9.5

Notation on or Exchange of Notes

67

SECTION 9.6

Trustee To Sign Amendments, Etc.

67

 

 

 

ARTICLE X

 

NOTE GUARANTEE

 

 

 

SECTION 10.1

Note Guarantee

67

 

iii



 

 

 

Page

 

 

 

SECTION 10.2

Execution and Delivery of Note Guarantees

70

SECTION 10.3

Guarantors May Consolidate, Etc., on Certain Terms

71

SECTION 10.4

Release of Guarantors

71

 

 

 

ARTICLE XI

 

MISCELLANEOUS

 

 

 

SECTION 11.1

Notices

72

SECTION 11.2

Certificate and Opinion as to Conditions Precedent

73

SECTION 11.3

Statements Required in Certificate or Opinion

74

SECTION 11.4

Rules by Trustee, Paying Agent, Registrar

75

SECTION 11.5

Legal Holidays

75

SECTION 11.6

Governing Law

75

SECTION 11.7

Submission to Jurisdiction

75

SECTION 11.8

No Personal Liability of Directors, Officers, Employees and Stockholders

76

SECTION 11.9

Successors

76

SECTION 11.10

Counterpart Originals

76

SECTION 11.11

Severability

76

SECTION 11.12

Table of Contents, Headings, Etc.

76

SECTION 11.13

Trust Indenture Act Controls

76

SECTION 11.14

Currency Indemnity

76

SECTION 11.15

Information

77

 

iv



 

EXHIBITS

Exhibit A

-

Form of Initial Global Note

 

 

Exhibit B

-

Form of Initial Definitive Note

 

 

Exhibit C

-

Form of Note Guarantee

 

 

Exhibit D

-

Form of Transfer Certificate for Transfer from Rule 144A Global

 

 

 

 

Note to Regulation S Global Note

 

 

Exhibit E

-

Form of Transfer Certificate for Transfer from Regulation S Global

 

 

 

 

Note to Rule 144A Global Note

 

 

 

NOTE:      This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture.

 

v



 

INDENTURE dated as of October 29, 2014, among FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), as Issuer, FRESENIUS MEDICAL CARE AG & Co. KGaA, a partnership limited by shares (Kommanditgesellschaft auf Aktien) organized under the laws of the Federal Republic of Germany (the “Company”), FRESENIUS MEDICAL CARE HOLDINGS, INC., a New York corporation (“FMCH”) and FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH, a limited liability company organized under the laws of the Federal Republic of Germany (“FMCD” and, together with the Company and FMCH, the “Guarantors”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”).

 

The Issuer has duly authorized the creation and issuance of its 4.75% Senior Notes due 2024.  The Notes consist of (i) $400,000,000 aggregate principal amount of notes issued on the date hereof (the “Initial Notes”) and (ii) Additional Notes (as defined herein) that may be issued on any Issue Date (all such notes referred to in clauses (i) and (ii) being referred to as the “Notes”); and, to provide therefor, the Issuer has duly authorized the execution and delivery of this Indenture.  The Notes will be guaranteed (the “Note Guarantee”) on a senior unsecured basis by each Guarantor.  Each of the Issuer and the Guarantors has duly authorized the execution and delivery of this Indenture.  All things necessary to make the Notes, when duly issued and executed by the Issuer and authenticated and delivered by the Trustee hereunder, the valid obligations of the Issuer, and the Note Guarantee, when executed by each Guarantor and endorsed upon the Notes, the valid obligation of each Guarantor and to make this Indenture a valid agreement of the Issuer and each Guarantor, have been done.

 

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders:

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1                 Definitions .  As used in this Indenture, the following terms shall have the following meanings:

 

“Accounting Principles” means U.S. GAAP, or, upon adoption thereof by the Company and notice to the Trustee, IFRS or any other accounting standards which are generally acceptable in the jurisdiction of organization of the Company, approved by the relevant regulatory or other accounting bodies in that jurisdiction and internationally generally acceptable and, in the case of IFRS or such other accounting standards, as in effect from time to time.

 

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged into or consolidated with any other Person or that is assumed in connection with the acquisition of assets from such Person and, in each case, not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary or such merger, consolidation or acquisition.

 

“Additional Amounts” shall have the meaning set forth in Section 4.12 hereof.

 

“Additional Notes” means additional 4.75% Senior Notes due 2024.

 


 

“Additional Taxing Jurisdiction” shall have the meaning set forth in Section 4.12 hereof.

 

“Affiliate” of any specified Person means:

 

(1)           any other Person, directly or indirectly, controlling or controlled by, or

 

(2)           under direct or indirect common control with such specified Person.

 

For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agent” means the Paying Agent, any Registrar, Authenticating Agent or co-Registrar.

 

“Agent Members” shall have the meaning set forth in Section 2.16.

 

“A/R Facility” means the accounts receivable facility established pursuant to the Sixth Amended and Restated Transfer and Administration Agreement dated as of January 17, 2013 by and among NMC Funding Corporation, as transferor, National Medical Care, Inc., as initial collection agent, Liberty Street Funding LLC and the other conduit investors party thereto, the financial institutions party thereto, The Bank of Tokyo-Mitsubishi UFJ Ltd., New York Branch, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank, New York Branch, and Royal Bank of Canada, as administrative agents, and The Bank of Nova Scotia, as administrative agent and as agent (as amended, modified, renewed, refunded, replaced, restated or refinanced from time to time).

 

“Asset Disposition” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly Owned Subsidiary of the Company, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

 

(1)           any shares of Capital Stock of any Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Subsidiary),

 

(2)           all or substantially all the assets of any division or line of business of the Company or any Subsidiary, or

 

(3)           any other assets of the Company or any Subsidiary outside of the ordinary course of business of the Company or such Subsidiary,

 

other than, in the case of clauses (1), (2) and (3) above,

 

2



 

(A)          a disposition of assets or issuance of Capital Stock by a Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned Subsidiary,

 

(B)          transactions permitted under Section 5.1, and

 

(C)          dispositions in connection with Permitted Liens, foreclosures on assets and any release of claims which have been written down or written off.

 

“Attributable Debt” means, in respect of any Sale and Leaseback Transaction, as of the time of determination, the total obligation (discounted to present value at the rate per annum equal to the discount rate which would be applicable to a Capital Lease Obligation with the like term in accordance with Accounting Principles) of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the initial term of the lease included in such Sale and Leaseback Transaction.

 

“Authenticating Agent” shall have the meaning set forth in Section 2.2.

 

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing:

 

(1)           the sum of the products of numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by,

 

(2)           the sum of all such payments.

 

“Bankruptcy Law” means (i) for purposes of the Company and FMCD organized under the laws of the Federal Republic of Germany, any bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application (including, without limitation, the German Insolvency Code (“ Insolvenzordnung ”) and (ii) for purposes of the Issuer and FMCH, or the Trustee, Title 11, United States Code or any similar federal, state or foreign law for the relief of debtors.

 

“Board of Directors” means, with respect to the Issuer or any Guarantor, as the case may be, the Board of Directors (or other body performing functions similar to any of those performed by a Board of Directors including those performed, in the case of a German stock corporation, by the management board or, in the case of a KGaA, by the General Partner) of such Person or any committee thereof duly authorized to act on behalf of such Board (or other body).

 

“Board Resolution” means, with respect to the Issuer or a Guarantor, a copy of a resolution certified by the Secretary or an Assistant Secretary or a member of the Board of Directors or Management Board of the Issuer or such Guarantor to have been duly adopted by the Board of Directors or the Management Board, or such committee of the Board of Directors or the Management Board or officers of the Issuer or such Guarantor to which authority to act on behalf of the Board of Directors or the Management Board has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee by the Issuer or the

 

3



 

Guarantor, as the case may be, and the Trustee shall be entitled to rely on such certification as conclusive evidence thereof.

 

“Business Day” means any day other than:

 

(1)           a Saturday or Sunday,

 

(2)           a day on which banking institutions in New York City, Frankfurt am Main or the jurisdiction of organization of the Issuer or of the office of a Paying Agent (other than the Trustee) are authorized or required by law or executive order to remain closed, or

 

(3)           a day on which the Corporate Trust Office of the Trustee is closed for business.

 

“Capital Lease Obligations” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with Accounting Principles, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with Accounting Principles; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.

 

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

 

“Cash Management Arrangements” means any cash management arrangement (including cash pool, virtual cash pool, treasury, depository, overdraft, credit or debit card, electronic funds transfer or other arrangements in respect of cash (including restricted cash) and cash equivalents or similar assets) of the Company and its Affiliates (including any Indebtedness arising thereunder) which arrangement is (i) in the ordinary course of business consistent with past practice, (ii) designed to provide cash management services, designed to enhance the rate of return of available cash and cash equivalents and entered into for investment and not speculative purposes as determined in good faith by the Company, or (iii) designed to reduce the overall tax liability of the Company and its Affiliates and for which the Company determines in good faith to be in compliance with tax laws applicable to it.

 

“Change of Control” means the occurrence of one or more of the following events:

 

(1)           so long as the Company is organized as a KGaA, if the General Partner of the Company charged with management of the Company shall at any time fail to be a Subsidiary of Fresenius SE, or if Fresenius SE shall fail at any time to own and control more than 25% of the capital stock with ordinary voting power in the Company;

 

4



 

(2)           if the Company is no longer organized as a KGaA, any event the result of which is that (A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Fresenius SE, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such Person or group shall be deemed to have “beneficial ownership” of all shares that any such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company and (B) Fresenius SE does not “beneficially own” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a greater percentage of the total voting power of the Voting Stock of the Company;

 

(3)           any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions herein).

 

“Change of Control Triggering Event” means the occurrence of a Change of Control and a Ratings Decline.

 

“Closing Date” means the date of this Indenture.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Company” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor.

 

“Consolidated Coverage Ratio” of any Person as of any date of determination means the ratio of (x) the aggregate amount of EBITDA for such Person’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such determination to (y) Consolidated Interest Expense for such four fiscal quarters; provided , however , that:

 

(1)           if such Person or any of its Subsidiaries has Incurred or repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness under any revolving credit facility unless such Indebtedness has been permanently repaid and any related commitment has been terminated) any Indebtedness since the beginning of such period that remains outstanding or discharged or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence or discharge of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred or discharged on the first day of such period and the Incurrence or discharge of any other Indebtedness as if such Incurrence or discharge had occurred on the first day of such period,

 

(2)           if since the beginning of such period such Person or any of its Subsidiaries shall have made any Asset Disposition, the EBITDA for such period shall be reduced by

 

5



 

an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of such Person or any of its Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect to such Person and its continuing Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Subsidiary is sold, the Consolidated Interest Expense for such period of credit and directly attributable to the Indebtedness of such Subsidiary to the extent such Person and its continuing Subsidiaries are no longer liable for such Indebtedness after such Asset Disposition),

 

(3)           if since the beginning of such period such Person or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary (or any Person which becomes a Subsidiary) or an acquisition of assets, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and

 

(4)           if since the beginning of such period any Person (that subsequently became a Subsidiary or was merged with or into such Person or any of its Subsidiaries since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by such Person or a Subsidiary of such Person during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Company, as applicable. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest of such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).

 

“Consolidated Interest Expense” means, with respect to any Person for any period, the total interest expense of such Person and its consolidated Subsidiaries, including the amortization of debt discount and premium, the interest component under capital leases and the implied interest component (if any) under any Receivables Financing, in each case on a consolidated basis determined in accordance with Accounting Principles.

 

“Consolidated Net Income” means, with respect to any Person for any period, the net income of such Person and its consolidated Subsidiaries (including, any net income

 

6



 

attributable to non-controlling interest of such Person and its consolidated Subsidiaries), in each case as determined on a consolidated basis in accordance with Accounting Principles; provided that extraordinary gains and losses shall be excluded from Consolidated Net Income.

 

“Corporate Trust Office” means the address of the Trustee specified in Section 11.1, or such other address as to which the Trustee may, from time to time, give written notice to the Company.

 

“Covenant Defeasance” shall have the meaning set forth in Section 8.3.

 

“Credit Facility” means the credit agreement entered into as of October 30, 2012 among, inter alios , the Company, FMCH, the other borrowers and guarantors identified therein, the lenders party thereto and Bank of America, N.A., as administrative agent, as amended, modified, renewed, refunded, replaced, restated or refinanced from time to time.

 

“Currency Agreement” means any foreign currency exchange contract, currency swap agreement or other similar agreement or arrangement.

 

“Custodian” means any receiver, trustee, assignee, liquidator, sequestration or similar official under any Bankruptcy Law.

 

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default (as defined herein).

 

“Default Interest Payment Date” shall have the meaning set forth in Section 2.13.

 

“Defeasance Trust” shall have the meaning set forth in Section 8.4.

 

“Definitive Notes” means Notes in definitive registered form substantially in the form of Exhibit B .

 

“Depositary” or “DTC” means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depositary by the Company, which Person must be a depositary registered under the Exchange Act.

 

“Designated Government Obligations” means direct non-callable and non-redeemable obligations (in each case, with respect to the issuer thereof) issued by any state that is, as of the Issue Date, a member of the European Union, or by the United States of America (including, in each case, any agency or instrumentality thereof), as the case may be, the payment of which is secured by the full faith and credit of the applicable member state or of the United States of America, as the case may be.

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

 

(1)           matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

 

7



 

(2)           is convertible or exchangeable for Indebtedness or Disqualified Stock; or

 

(3)           is redeemable at the option of the holder thereof, in whole or in part,

 

in each case on or prior to the first anniversary of the Stated Maturity of the Notes; provided , however , that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions of Section 4.11.

 

“EBITDA” for any Person for any period means the sum of Consolidated Net Income of such Person, plus Consolidated Interest Expense of such Person plus the following to the extent deducted in calculating such Consolidated Net Income:

 

(1)           all income tax expense of such Person and its Subsidiaries;

 

(2)           depreciation expense;

 

(3)           amortization expense; and

 

(4)           other non-cash charges (excluding (1) restructuring charges which do not initially involve a cash payment but as for which there will be a subsequent cash payment and (2) charges resulting from accruals of costs incurred in the ordinary course of business, other than those relating to pension liabilities), in each case for such period.

 

Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation, amortization and other non-cash charges of, a Subsidiary that is not a Wholly Owned Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Subsidiary or its stockholders.

 

“Event of Default” shall have the meaning set forth in Section 6.1.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Finance Subsidiary” means any Wholly Owned Subsidiary of the Company created for the sole purpose of issuing evidences of Indebtedness and which is subject to similar restrictions on its activities as the Issuer.

 

“Fitch” means Fitch, Inc. and its successors.

 

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“FME EBITDA” means the EBITDA for the Company, provided that:

 

(1)           if since the beginning of such period the Company or any of its Subsidiaries shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative), directly attributable thereto for such period,

 

(2)           if since the beginning of such period the Company or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary (or any Person which becomes a Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Investment or acquisition occurred on the first day of such period, and

 

(3)           if since the beginning of such period the Company or any of its Subsidiaries (that subsequently became a Subsidiary or was merged with or into the Company or such Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (1) or (2) above if made by the Company or such Subsidiary during such period, EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.

 

For purposes of this definition (but not, for the avoidance of doubt, for the purpose of any other defined terms used in this definition), whenever pro forma effect is to be given to an acquisition of assets, or the amount of income or earnings relating thereto, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Company, as applicable.

 

“Fresenius SE” means Fresenius SE & Co. KGaA, a partnership limited by shares (Kommanditgesellschaft auf Aktien).

 

“General Partner” means Fresenius Medical Care Management AG, a German stock corporation, including its successors and assigns and other Persons, in each case who serve as the general partner ( persönlich haftender Gesellschafter ) of the Company from time to time.

 

“Global Notes” shall mean Notes in registered global form substantially in the form of Exhibit A .

 

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any Person (other than, in the case of subsidiaries, obligations which would not constitute Indebtedness) and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)           to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue

 

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of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or

 

(2)           entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

 

provided , however , that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“Guarantee Agreement” means, in the context of a consolidation, merger or sale of all or substantially all of the assets of a Guarantor, an agreement by which the Surviving Person from such a transaction expressly assumes all of the obligations of such Guarantor under its Note Guarantee.

 

“Guarantor” means each of the Company, FMCH and FMCD and any successor or additional Guarantor, unless released from its obligations under its Note Guarantee in accordance with the terms of this Indenture.

 

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

 

“Holder” means a Person in whose name a Note is registered on the Registrar’s books.

 

“IFRS” means international financial reporting standards and interpretations issued by the International Accounting Standards Board and adopted by the European Commission, as in effect from time to time.

 

“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided , however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness.

 

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

 

(1)           the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable,

 

(2)           all Capital Lease Obligations of such Person,

 

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(3)           all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (other than (x) customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business, (y) trade debt Incurred in the ordinary course of business and not overdue by 90 days or more and (z) obligations Incurred under a pension, retirement or deferred compensation program or arrangement regulated under the Employee Retirement Income Security Act of 1974, as amended, or the laws of a foreign government),

 

(4)           all obligations of such Person for the reimbursement of any obligor on any letter of credit, bank guarantee, banker’s acceptance or similar credit transaction (except to the extent such reimbursement obligation relates to trade debt in the ordinary course of business and such reimbursement obligation is paid within 30 days after payment of the trade debt),

 

(5)           the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends),

 

(6)           all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee,

 

(7)           all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured, and

 

(8)           to the extent not otherwise included in this definition, Hedging Obligations of such Person.

 

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. For the avoidance of doubt, the following will not be treated as Indebtedness:

 

(1)           Indebtedness Incurred in respect of workers’ compensation claims, self insurance obligations, performance, surety and similar bonds and completion guarantees provided in this ordinary course of business;

 

(2)           Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition or acquisition of any business, assets or Capital Stock of a Subsidiary, provided , that the maximum aggregate liability in respect of all such Indebtedness (other than in respect of tax and environmental indemnities) shall at no time

 

11



 

exceed, in the case of a disposition, the gross proceeds actually received by the Company and its Subsidiaries in connection with such disposition and, in the case of an acquisition, the fair market value of any business assets or Capital Stock acquired;

 

(3)           Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five Business Days of the Incurrence.

 

“Indenture” means this Indenture, as amended, modified or supplemented from time to time in accordance with the terms hereof.

 

“Initial Notes” shall have the meaning set forth in the preamble to this Indenture.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement or other similar financial agreement or arrangement.

 

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person; provided , however , that advances, loans or other extensions of credit arising under the Cash Management Arrangements shall not be deemed Investments.

 

“Investment Grade” means a rating of (i) BBB- or higher by S&P, (ii) Baa3 or higher by Moody’s and (iii) BBB- or higher by Fitch, or the equivalent of such ratings by S&P, Moody’s or Fitch and the equivalent in respect of rating categories of any Rating Agencies substituted for S&P, Moody’s or Fitch.

 

“Investment Grade Status” exists as of any time if at such time any two of the following three are satisfied: (i) the rating assigned to the Notes by Moody’s is at least Baa3 (or the equivalent) or higher, (ii) the rating assigned to the Notes by S&P is at least BBB- (or the equivalent) or higher or (iii) the rating assigned to the Notes by Fitch is at least BBB- (or the equivalent) or higher, or in each case, the equivalent in respect of rating categories of any Rating Agencies substituted for S&P, Moody’s or Fitch.

 

“Issue Date” means the date on which any Notes are issued.

 

“Issuer” means Fresenius Medical Care US Finance II, Inc. until a successor replaces it pursuant to this Indenture and thereafter means such successor.

 

“Issuer Order” means a written order or request signed in the name of the Issuer by a Responsible Officer of the Issuer and delivered to the Trustee by the Issuer.

 

“KGaA” means a German partnership limited by shares ( Kommanditgesellschaft auf Aktien ).

 

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“Legal Defeasance” shall have the meaning set forth in Section 8.2.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

 

“Listing Agent” means BNP Paribas Securities Services, Luxembourg Branch.

 

“Luxembourg Paying Agent” shall have the meaning set forth in Section 2.3.

 

“Maturity Date” means October 15, 2024.

 

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

 

“Note Guarantee” means the Guarantee by a Guarantor of the Issuer’s obligations under the Notes.

 

“Notes” shall have the meaning set forth in the preamble of this Indenture.

 

“Offering Memorandum” means that certain Offering Memorandum dated October 24, 2014 relating to the Initial Notes and $500,000,000 aggregate principal amount of the Issuer’s 4.125% Senior Notes due 2020.

 

“Officers’ Certificate” means a certificate signed by two Responsible Officers of the Issuer or of any Guarantor.

 

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer, a Guarantor or the Trustee.

 

“Paying Agent” shall have the meaning set forth in Section 2.3.

 

“Permitted Liens” means, with respect to any Person:

 

(1)           pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or Designated Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

 

(2)           Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith if a reserve or other appropriate provisions, if any, as are required by Accounting Principles have been made in respect thereof;

 

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(3)           Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith provided appropriate reserves, if any, as are required by Accounting Principles have been made in respect thereof;

 

(4)           Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

 

(5)           encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

(6)           Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be, secured by a Lien on the same property securing such Hedging Obligation or Interest Rate Agreement;

 

(7)           leases, subleases and licenses of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries and leases, subleases and licenses of other assets in the ordinary course of business;

 

(8)           judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

(9)           Liens for the purpose of securing the payment (or the refinancing of the payment) of all or a part of the purchase price of, or Capital Lease Obligations with respect to, assets or property acquired or constructed in the ordinary course of business; provided , that:

 

(a)           the aggregate principal amount secured by such Liens does not exceed the cost of the assets or property so acquired or constructed; and

 

(b)           such Liens are created within 180 days of construction or acquisition of such assets or property (or, upon a refinancing, replace Liens created within such period) and do not encumber any other assets or property of the Company or any Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

 

(10)         Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided , that such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depositary institution;

 

14



 

(11)         Liens arising from United States Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;

 

(12)         Liens existing on the Closing Date (other than Liens under clause (19));

 

(13)         Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided , however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Subsidiary;

 

(14)         Liens on property at the time the Company or a Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Subsidiary; provided , however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further , however , that such Liens may not extend to any other property owned by the Company or any Subsidiary;

 

(15)         Liens securing Indebtedness or other obligations of the Company to a Subsidiary or of a Subsidiary owing to the Company or a Subsidiary;

 

(16)         Liens securing the Notes and all other Indebtedness which by its terms must be secured if the Notes are secured;

 

(17)         Liens securing Indebtedness Incurred to refinance Indebtedness that was previously secured (other than Liens under clause (19)); provided , that such Lien is limited to all or part of the same property or assets that secured the Indebtedness refinanced;

 

(18)         Liens arising by operation of law or by agreement to the same effect in the ordinary course of business;

 

(19)         Liens securing (x) Indebtedness under the Credit Facility or (y) Indebtedness permitted to be incurred in accordance with Section 4.3(a), in an aggregate principal amount of Indebtedness under (x) and (y) secured thereby not to exceed the greater of (i) $6.0 billion and (ii) 2.5 times the FME EBITDA for the most recently ended four full fiscal quarters for which internal financial statements are available;

 

(20)         Liens securing the A/R Facility;

 

(21)         other Liens securing Indebtedness having an aggregate principal amount, measured as of the date of creation of any such Lien and the date of Incurrence of any such Indebtedness, not to exceed $1.5 billion at any one time outstanding; and

 

(22)         Liens securing any Cash Management Arrangement.

 

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“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other entity.

 

“Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

 

“Private Placement Legend” means the legend set forth in Section 2.7(f).

 

“Qualified Capital Stock” means any Capital Stock which is not Disqualified Stock.

 

“Rating Agencies” means:

 

(1)           S&P,

 

(2)           Moody’s, and

 

(3)           Fitch, or

 

(4)           if S&P, Moody’s or Fitch or all three shall not make a rating of the Notes publicly available, despite the Company using its commercially reasonable efforts to obtain such a rating, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P, Moody’s, Fitch or all three, as the case may be.

 

“Rating Category” means:

 

(1)           with respect to S&P, any of the following categories:  BB, B, CCC, CC, C and D (or equivalent successor categories),

 

(2)           with respect to Moody’s, any of the following categories:  Ba, B, Caa, Ca, C and D (or equivalent successor categories),

 

(3)           with respect to Fitch, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories); and

 

(4)           the equivalent of any such category of S&P, Moody’s or Fitch used by another rating agency.  In determining whether the rating of the Notes has decreased by one or more gradations, gradations within rating categories (+ and - for S&P, 1, 2 and 3 for Moody’s, + and - for Fitch; or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, which constitute a decrease of one gradation).

 

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“Rating Date” means the date which is 90 days prior to the earlier of (1) a Change of Control and (2) public notice of the occurrence of a Change of Control or of the intention by the Company or any Person to effect a Change of Control.

 

“Ratings Decline” means the occurrence on or within 90 days after the date of the first public notice of either the occurrence of a Change of Control or of a transaction which will effect a Change of Control, whichever is earlier (which period shall be extended so long as any Rating Agency has publicly announced that it is considering a possible downgrade of the Notes) of (1) in the event the Notes are rated by at least two of the three Rating Agencies on the Rating Date as Investment Grade, a decrease in the rating of the Notes by two of the three Rating Agencies to a rating that is below Investment Grade, or (2) in the event that the Notes are rated below Investment Grade by at least two of the three Rating Agencies on the Rating Date, a decrease in the rating of the Notes by any one such Rating Agency by one or more gradations (including gradations within Rating Categories as well as between Rating Categories).

 

“Receivables Financings” means:

 

(1)           the A/R Facility, and

 

(2)           any financing transaction or series of financing transactions that have been or may be entered into by the Company or a Subsidiary pursuant to which the Company or a Subsidiary may sell, convey or otherwise transfer to a Subsidiary or Affiliate, or any other Person, or may grant a security interest in, any receivables or interests therein secured by the merchandise or services financed thereby (whether such receivables are then existing or arising in the future) of the Company or such Subsidiary, as the case may be, and any assets related thereto, including without limitation, all security interests in merchandise or services financed thereby, the proceeds of such receivables, and other assets which are customarily sold or in respect of which security interests are customarily granted in connection with securitization transactions involving such assets.

 

“Record Date” means the Record Dates specified in the Notes.

 

“Redemption Date” when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and Paragraph 8 of the Notes.

 

“Redemption Price” when used with respect to any Note to be redeemed, means the price fixed for such redemption pursuant to this Indenture and Paragraphs 8 and 9 of the Notes.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company or any Subsidiary existing on the Closing Date or Incurred in compliance with Section 4.3, including Indebtedness that Refinances Refinancing Indebtedness; provided , however , that:

 

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(1)           such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced,

 

(2)           such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced, and

 

(3)           such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; provided further , however , that Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that is not a Guarantor that Refinances Indebtedness of a Guarantor or (y) Indebtedness of a Guarantor that Refinances Indebtedness of a Subsidiary that is not a Guarantor.

 

“Registrar” shall have the meaning set forth in Section 2.3.

 

“Regulation S” means Regulation S (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

“Regulated Market of the Luxembourg Stock Exchange” means the regulated market of the Luxembourg Stock Exchange, a market appearing on the list of regulated markets issued by the European Community pursuant to Directive 2004/39EC of April 21, 2004 on markets in financial instruments.

 

“Regulation S Global Note” shall have the meaning set forth in Section 2.1.

 

“Regulation S Notes” shall have the meaning set forth in Section 2.1.

 

“Relevant Taxing Jurisdiction” shall have the meaning set forth in Paragraph 2 of the Notes.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, senior vice president—finance, treasurer, assistant treasurer, managing director, management board member or director of a company (or in the case of the Company, a Responsible Officer of its General Partner, other managing entity or other Person authorized to act on its behalf, and if such Person is also a partnership, limited liability company or similarly organized entity, a Responsible Officer of the entity that may be authorized to act on behalf of such Person).

 

“Restricted Period” shall have the meaning set forth in Section 2.7(b) hereof.

 

“Rule 144” means Rule 144 (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

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“Rule 144A” means Rule 144A (including any successor regulation thereto) under the Securities Act, as it may be amended from time to time.

 

“Rule 144A Global Note” shall have the meaning set forth in Section 2.1 hereof.

 

“Rule 144A Notes” shall have the meaning set forth in Section 2.1 hereof.

 

“Sale and Leaseback Transaction” means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Issuer or any Guarantor or a Subsidiary of any property, whether owned by the Issuer, a Guarantor or any Subsidiary at the Closing Date or later acquired, which has been or is to be sold or transferred by the Issuer, a Guarantor or such Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property.

 

“SEC” means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Securities Act and the Exchange Act, then the body performing such duties at such time.

 

“Secured Indebtedness” means any Indebtedness of the Company secured by a Lien.

 

“Securities Act” means the U.S. Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

 

“Significant Subsidiary” means, with respect to any Person, any Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1.02 of Regulation S-X under the Exchange Act.

 

“S&P” means Standard & Poor’s Corporation and its successors.

 

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

 

“Subordinated Obligation” means any Indebtedness of the Issuer or a Guarantor (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes or such Guarantor’s Note Guarantee pursuant to a written agreement to that effect.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:

 

(1)           such Person;

 

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(2)           such Person and one or more Subsidiaries of such Person; or

 

(3)           one or more Subsidiaries of such Person.

 

Unless otherwise provided, all references to a Subsidiary shall be a Subsidiary of the Company.

 

“Successor” shall have the meaning set forth in Section 5.3.

 

“Surviving Person” means, with respect to any Person involved in any merger, consolidation or other business combination or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of such Person’s assets, the Person formed by or surviving such transaction or the Person to which such disposition is made.

 

“Tax Redemption Date” when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and Paragraph 9 of the Notes.

 

“Taxes” shall have the meaning set forth in Paragraph 2 of the Notes.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect on the date of this Indenture; provided , however , that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

“Treasury Rate” means, with respect to a Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H. 15(519) that has become publicly available at least two Business Days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Redemption Date to October 15, 2024; provided, however, that if the period from the Redemption Date to such date is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to such date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

“Trust Officer” means any officer of the Trustee (or any successor of the Trustee), including any director, managing director, vice president, assistant vice president, corporate trust officer, assistant corporate trust officer, associate or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at that time shall be such officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such trust matter is referred because of his or her knowledge of and familiarity with the particular subject.

 

“Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor.

 

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“U.S. GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in:

 

(1)           the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants,

 

(2)           statements and pronouncements of the Financial Accounting Standards Board,

 

(3)           such other statements by such other entity as approved by a significant segment of the accounting profession, and

 

(4)           the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

 

“Voting Stock” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

“Wholly Owned Subsidiary” means a Subsidiary all the Capital Stock of which (other than directors’ qualifying shares and shares held by other Persons to the extent such shares are required by applicable law to be held by a Person other than its parent or a Subsidiary of its parent) is owned by the Company or by one or more Wholly Owned Subsidiaries, or by the Company and one or more Wholly Owned Subsidiaries.

 

SECTION 1.2                 Rules of Construction .  Unless the context otherwise requires:

 

(a)           a term has the meaning assigned to it;

 

(b)           an accounting term not otherwise defined has the meaning assigned to it in accordance with Accounting Principles;

 

(c)           “or” is not exclusive;

 

(d)           words in the singular include the plural, and words in the plural include the singular;

 

(e)           provisions apply to successive events and transactions; and

 

(f)            “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

 

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SECTION 1.3                 Incorporation by Reference of Trust Indenture Act .

 

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in, and made a part of, this Indenture.

 

The following TIA terms have the following meanings:

 

“indenture securities” means the Notes and any Note Guarantee;

 

“indenture security holder” means a Holder;

 

“indenture to be qualified” means this Indenture;

 

“indenture trustee” or “institutional trustee” means the Trustee;

 

“obligor” on the Notes means the Issuer and any successor obligor upon the Notes or any Guarantor.

 

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by the Commission rule under the TIA have the meanings so assigned to them therein.

 

ARTICLE II

 

THE NOTES

 

SECTION 2.1                 Form and Dating .  The Notes and the notation relating to the Trustee’s certificate of authentication thereof, shall be substantially in the form of Exhibit A (in the case of Global Notes) and Exhibit B (in the case of the Definitive Notes), as applicable.  The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage.  The Issuer and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on them not inconsistent with the terms of this Indenture.  Each Note shall be dated the Issue Date and shall show the date of its authentication.

 

The terms and provisions contained in the Notes, annexed hereto as Exhibits A and B , shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Issuer, the Guarantors, the Trustee and the Paying Agent, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  The Notes will initially be represented by the Global Notes.  Definitive Notes will be issued in exchange for Global Notes only in accordance with Section 2.6(a).

 

As long as the Notes are in global form, the Paying Agent (in lieu of the Trustee) shall be responsible for:

 

(1)           paying sums due on the Global Notes; and

 

(2)           arranging on behalf of and at the expense of the Issuer for notices to be communicated to Holders in accordance with the terms of this Indenture.

 

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Each reference in this Indenture to the performance of duties set forth in clauses (1) and (2) above by the Trustee includes performance of such duties by the Paying Agent.

 

Notes offered and sold in their initial distribution in reliance on Regulation S shall be initially issued as one or more global notes, in registered, global form without interest coupons, substantially in the form of Exhibit A hereto, with such applicable legends as are provided in Section 2.7(f)(ii), except as otherwise permitted herein, and shall be referred to collectively herein as the “Regulation S Global Note.”  The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee (following receipt by the Trustee of all the information required hereunder), as hereinafter provided (or by the issue of a further Regulation S Global Note), in connection with a corresponding decrease or increase in the aggregate principal amount of the Rule 144A Global Note or in consequence of the issue of Definitive Notes or Additional Notes in the form of Regulation S Global Notes, as hereinafter provided.  The Regulation S Global Note and all other Notes that are not Rule 144A Notes shall collectively be referred to herein as the “Regulation S Notes.”

 

Notes offered and sold in their initial distribution in reliance on Rule 144A shall be initially issued as one or more global notes in registered, global form without interest coupons, substantially in the form of Exhibit A hereto, with such applicable legends as are provided in Section 2.7(f)(ii), except as otherwise permitted herein, and shall be referred to collectively herein as the “Rule 144A Global Note.”  The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee (following receipt by the Trustee of all information required hereunder), as hereinafter provided (or by the issue of a further Rule 144A Global Note), in connection with a corresponding decrease or increase in the aggregate principal amount of the Regulation S Global Note, or in consequence of the issue of Definitive Notes or Additional Rule 144A Global Notes, as hereinafter provided.  The Rule 144A Global Note and all other Notes (excluding interests in Rule 144A Global Notes which are transferred in accordance with Section 2.7(a) hereunder), if any, evidencing the debt, or any portion of the debt, initially evidenced by such Rule 144A Global Note, shall collectively be referred to herein as the “Rule 144A Notes.”

 

SECTION 2.2                 Execution and Authentication .  One Responsible Officer of or one Person duly authorized by all requisite corporate actions by the Issuer shall sign the Notes for the Issuer by manual or facsimile signature.

 

If a Responsible Officer whose signature is on a Note was a Responsible Officer at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.  The Trustee shall be entitled to rely on such signature as authentic and shall be under no obligation to make any investigation in relation thereto.

 

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note.  The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

 

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Except as otherwise provided herein, the aggregate principal amount of Notes which may be outstanding at any time under this Indenture is not limited in amount.  The Trustee shall authenticate such Notes, which shall consist of (i) Initial Notes for original issue on the Closing Date in an aggregate principal amount not to exceed $400,000,000 and (ii) Additional Notes from time to time for issuance after the Closing Date to the extent otherwise permitted hereunder (including, without limitation, under Section 4.3 hereof), in each case upon receipt of an Issuer Order.  Additional Notes will be treated the same as the Initial Notes for all purposes under this Indenture, including, without limitation, for purposes of waivers, amendments, redemptions and offers to purchase.  Such Issuer Order shall specify the aggregate principal amount of Notes to be authenticated, the type of Notes, the date on which the Notes are to be authenticated, the issue price and the date from which interest on such Notes shall accrue, whether the Notes are to be Initial Notes or Additional Notes and whether or not the Notes shall bear the Private Placement Legend, or such other information as the Trustee may reasonably request.  In authenticating the Notes and accepting the responsibilities under this Indenture in relation to the Notes, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel in a form reasonably satisfactory to the Trustee stating that the form and terms thereof have been established in conformity with the provisions of this Indenture, do not give rise to a Default and that the issuance of such Notes has been duly authorized by the Issuer.  Upon receipt of an Issuer Order, the Trustee shall authenticate Notes in substitution for Notes originally issued to reflect any name change of the Issuer.

 

The Trustee may appoint an authenticating agent (“Authenticating Agent”) reasonably acceptable to the Issuer to authenticate Notes.  Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent.  An Authenticating Agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer.

 

The Notes shall be issuable only in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

SECTION 2.3                 Registrar and Paying Agent .  The Issuer shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”), (ii) an office or agency where Notes may be presented for payment and (iii) upon issuance of Definitive Notes, an office or agency where Definitive Notes may be presented for payment to the Luxembourg Paying Agent.  The Registrar shall keep a register of the Notes and of their transfer and exchange.  At the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders.  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Issuer may change any Paying Agent or Registrar without notice to any Holder.  The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Issuer, the Company or any of its Subsidiaries may act as Paying Agent or Registrar to the extent permitted under applicable laws or regulations.

 

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The Issuer shall notify the Trustee and the Trustee shall notify the Holders of the name and address of any Agent not a party to this Indenture.  The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall incorporate the provisions of the TIA.  The agreement shall implement the provisions of this Indenture and the Notes that relate to such Agent.  The Issuer shall notify the Trustee of the name and address of any such Agent.  If the Issuer fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.7 hereof.

 

The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent.  If and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange so require, the Issuer shall appoint BNP Paribas Securities Services, or such other Person located in Luxembourg and reasonably acceptable to the Trustee (reasonableness to be determined objectively), as the Luxembourg paying and transfer agent (together with its successor in such capacity, the “Luxembourg Paying Agent”).

 

The Issuer initially appoints DTC to act as the Depositary with respect to the Global Notes.

 

SECTION 2.4                 Paying Agent To Hold Assets in Trust .  The Issuer shall require the Paying Agent to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, Additional Amounts, if any, premium, if any, or interest on, the Notes, and shall promptly notify the Trustee of any Default by the Issuer in making any such payment.  The Issuer at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets distributed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed.  Upon distribution to the Trustee of all assets that shall have been delivered by the Issuer to the Paying Agent pursuant to this Section 2.4, the Paying Agent shall have no further liability for such assets.

 

SECTION 2.5                 List of Holders .  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders.  If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee within two Business Days after each Record Date as of such Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of Holders, which list may be conclusively relied upon by the Trustee.

 

SECTION 2.6                 Book-Entry Provisions for Global Notes .  The Global Notes initially shall (i) be registered in the name of the DTC or its nominee, (ii) be delivered to the DTC or its custodian and (iii) bear the following legend:

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE

 

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DEPOSITORY TRUST COMPANY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE TO THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

(a)           Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the DTC to a nominee of the DTC or by a nominee of the DTC to the DTC or another successor of the DTC or a nominee of such successor.  Interests of beneficial owners in the Global Notes may be transferred or exchanged for Definitive Notes in accordance with the rules and procedures of the DTC and the provisions of Section 2.7.  All Global Notes shall be exchanged by the Issuer (with authentication by the Trustee) for one or more Definitive Notes, if (a) the DTC (i) has notified the Issuer that it is unwilling or unable to continue as Depositary and (ii) a successor to the DTC has not been appointed by the Issuer within 90 days of such notification, (b) the DTC so requests following an Event of Default hereunder or (c) in whole (but not in part) at any time if the Issuer in its sole discretion determines.  If an Event of Default occurs and is continuing, the Issuer shall, at the written request delivered through the DTC, exchange all or part of a Global Note for one or more Definitive Notes (with authentication by the Trustee); provided, however, that the principal amount of such Definitive Notes and such Global Note after such exchange shall be $2,000 or integral multiples of $1,000 in excess thereof.  Whenever all of a Global Note is exchanged for one or more Definitive Notes, it shall be surrendered by the Holder thereof to the Trustee for cancellation.  Whenever a part of a Global Note is exchanged for one or more Definitive Notes, the Global Note shall be surrendered by the Holder thereof to the Paying Agent who together with the Trustee, following such surrender, shall cause an adjustment to be made to Schedule A of such Global Note such that the principal amount of such Global Note will be equal to the portion of such Global Note not exchanged and shall thereafter return such Global Note to such Holder.  A Global Note may not be exchanged for a Definitive Note other than as provided in this Section 2.6(a).

 

(b)           In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to Section 2.6(a), the Global Notes shall be deemed to be surrendered to the Paying Agent for cancellation, and the Issuer shall execute, and the Trustee shall upon written instructions from the Issuer authenticate and make available for delivery, to each beneficial owner in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount of Definitive Notes of authorized denominations.

 

(c)           Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.6(a) shall, except as otherwise provided by Section 2.7, bear the Private Placement Legend.

 

SECTION 2.7                 Registration of Transfer and Exchange .  Notwithstanding any provision to the contrary herein, so long as a Note remains outstanding, transfers of beneficial interests in Global Notes or transfers of Definitive Notes, in whole or in part, shall be made only in accordance with this Section 2.7.

 

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(a)           If a holder of a beneficial interest in the Rule 144A Global Note wishes at any time to exchange its interest in such Rule 144A Global Note for an interest in the Regulation S Global Note, or to transfer its interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of an interest in such Regulation S Global Note, such holder may, subject to the rules and procedures of the DTC, to the extent applicable, and to the requirements set forth in this Section 2.7(a), exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in such Regulation S Global Note.  Such exchange or transfer shall only be made upon receipt by the Paying Agent, as transfer agent, at its Corporate Trust Office or, so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of that exchange so require, upon receipt by the Luxembourg Paying Agent, as transfer agent, at its office in Luxembourg of (1) written instructions given in accordance with the procedures of the DTC, to the extent applicable, from or on behalf of a holder of a beneficial interest in the Rule 144A Global Note directing the Paying Agent, as transfer agent, to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the Rule 144A Global Note to be exchanged or transferred, (2) a written order given in accordance with the procedures of the DTC, to the extent applicable, containing information regarding the account to be credited with such increase and the name of such account, and (3) a certificate in the form of Exhibit D given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S or Rule 144 under the Securities Act.  Upon such receipt, the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC, to reduce or reflect on its records a reduction of the Rule 144A Global Note by the aggregate principal amount of the beneficial interest in such Rule 144A Global Note to be so exchanged or transferred from the relevant participant, and the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Rule 144A Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions of a beneficial interest in such Regulation S Global Note equal to the reduction in the principal amount of such Rule 144A Global Note.

 

(b)           If a holder of a beneficial interest in the Regulation S Global Note wishes at any time to exchange its interest in such Regulation S Global Note for an interest in the Rule 144A Global Note, or to transfer its interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of an interest in such Rule 144A Global Note, such holder may, subject to the rules and procedures of the DTC, to the extent applicable, and to the requirements set forth in this Section 2.7(b), exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in such Rule 144A Global Note.  Such exchange or transfer shall only be made upon receipt by the Paying Agent, as transfer agent, at its Corporate Trust Office or, so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of that exchange so require, upon receipt by the Luxembourg Paying Agent, as transfer agent, at its office in Luxembourg of (l) instructions given in accordance with the procedures of the DTC, to the extent applicable, from or on behalf of a beneficial owner of an interest in the Regulation S Global Note directing the Paying Agent, as transfer agent, to credit or cause to be credited a beneficial interest in the Rule 144A Global Note in an

 

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amount equal to the beneficial interest in the Regulation S Global Note to be exchanged or transferred, (2) a written order given in accordance with the procedures of the DTC, to the extent applicable, containing information regarding the account to be credited with such increase and the name of such account, and (3) prior to or on the 40th day after the later of the commencement of the offering of the Notes and the relevant Issue Date (the “Restricted Period”), a certificate in the form of Exhibit E given by the holder of such beneficial interest and stating that the Person transferring such interest in such Regulation S Note reasonably believes that the Person acquiring such interest in such Rule 144A Note is a Qualified Institutional Buyer (as defined in Rule 144A) and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of the United States or any other jurisdiction.  Upon such receipt, the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC to reduce or reflect on its records a reduction of the Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be exchanged or transferred, and the Paying Agent, as transfer agent, shall promptly deliver instructions to the DTC concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Rule 144A Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in such Rule 144A Global Note equal to the reduction in the principal amount of such Regulation S Global Note.  After the expiration of the Restricted Period, the certification requirement set forth in clause (3) of the second sentence of this Section 2.7(b) will no longer apply to such transfers.

 

(c)           Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.

 

(d)           In the event that a Global Note is exchanged for Definitive Notes in registered form without interest coupons, pursuant to Section 2.6(a), or a Definitive Note in registered form without interest coupons is exchanged for another such Definitive Note in registered form without interest coupons, or a Definitive Note is exchanged for a beneficial interest in a Global Note, such Notes may be exchanged or transferred for one another only in accordance with such procedures as are substantially consistent with the provisions of Sections 2.7(b) and (c) above (including the certification requirements intended to ensure that such exchanges or transfers comply with Rule 144, Rule 144A or Regulation S, as the case may be) and as may be from time to time adopted by the Issuer and the Trustee.

 

(e)           Prior to the expiration of the Restricted Period, beneficial interests in the Regulation S Global Note may only be exchanged or transferred in accordance with the certification requirements hereof.

 

(f)            (i)  Other than in the case of Notes issued pursuant to a registration statement which has been declared effective under the Securities Act, each Note issued hereunder shall, upon issuance, bear the legend set forth in clause (ii) below (the “Private Placement Legend”) and such legend shall not be removed from such Note except as provided in the next sentence. 

 

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The legend on a Note may be removed from a Note if there is delivered to the Issuer and the Trustee such satisfactory evidence, which may include an opinion of independent counsel licensed to practice law in the State of New York, as may be reasonably required by the Issuer and the Trustee, that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Note will not violate the registration requirements of the Securities Act, and the Issuer and the Trustee consent to such removal.  Upon provision of such satisfactory evidence, the Trustee, at the written direction of the Issuer, shall authenticate and deliver in exchange for such Note another Note or Notes having an equal aggregate principal amount that does not bear such legend.  If such a legend required for a Note has been removed from a Note as provided above, no other Note issued in exchange for all or any part of such Note shall bear such legend, unless the Issuer has reasonable cause to believe that such other Note is a “restricted security” within the meaning of Rule 144 and instructs the Trustee to cause a legend to appear thereon.

 

(ii)           To the extent required by paragraph (f)(i) above, the Notes shall bear the following legend on the face thereof:

 

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT

 

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HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.”

 

(g)           By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture.

 

Neither the Trustee nor the Paying Agent shall have any obligation or duty to monitor, and shall not be liable for any failure to, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Agent Members or beneficial owners of interest in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.6 or this Section 2.7.  The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

 

(h)           Definitive Notes shall be transferable only upon the surrender of a Definitive Note for registration of transfer.  When a Definitive Note is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements for such transfers are met.  When Definitive Notes are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Definitive Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.  When a Definitive Note is presented to the Registrar with a request to transfer in part, the transferor shall be entitled to receive without charge a Definitive Note representing the balance of such Definitive Note not transferred.  To permit registration of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Definitive Notes at the Registrar’s or co-registrar’s request.

 

(i)            The Issuer shall not be required to make, and the Registrar need not register transfers or exchanges of, Definitive Notes (i) for a period of 15 calendar days prior to any date fixed for the redemption of the Notes, (ii) for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to be redeemed in part, (iii) for a payment period of 15 calendar days prior to any Record Date, or (iv) that the registered Holder of Notes has tendered (and not withdrawn) for repurchase in connection with a Change of Control.

 

(j)            Prior to the due presentation for registration of transfer of any Definitive Note, the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the Person in whose name a Definitive Note is registered as the absolute

 

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owner of such Definitive Note for the purpose of receiving payment of principal, interest or Additional Amounts, if any, on such Definitive Note and for all other purposes whatsoever, whether or not such Definitive Note is overdue, and none of the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary.

 

(k)           The Issuer may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section 2.7.

 

(l)            All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

 

(m)          Holders of Notes (or holders of interests therein) initially offered or sold in the United States to “Qualified Institutional Buyers” as defined in Rule 144A under the Securities Act pursuant to such rule and prospective purchasers designated by such Holders (or holders of interests therein) will have the right to obtain from the Issuer upon request by such Holders (or holders of interests therein) or prospective purchasers, during any period in which the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, or not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the information required by paragraph d(4)(i) of Rule 144A in connection with any transfer or proposed transfer of such Notes.

 

SECTION 2.8                 Replacement Notes .  If a mutilated Definitive Note is surrendered to the Registrar, if a mutilated Global Note is surrendered to the Issuer or if the Holder of a Note claims that such Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note in such form as the Note being replaced in the manner specified in this Section 2.8.  If required by the Trustee, the Registrar or the Issuer, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of the Issuer, the Registrar and the Trustee, to protect the Issuer, the Registrar, the Trustee and any Agent from any loss which any of them may suffer if a Note is replaced.  The Issuer may charge such Holder for its reasonable out of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel.  Every replacement Note is an additional obligation of the Issuer.  The provisions of this Section 2.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost, stolen or taken Notes.

 

SECTION 2.9                 Outstanding Notes .  Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those canceled by it, those delivered to it for cancellation, those reductions in the Global Note effected in accordance with the provisions hereof and those described in this Section 2.9 as not outstanding.  Subject to Section 2.10, a Note does not cease to be outstanding because the Issuer or any of its Affiliates holds the Note.

 

If a Note is replaced pursuant to Section 2.8 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it, and upon which it shall be entitled to rely in accordance with Section 7.1(a), that the replaced Note is held by a bona fide purchaser.  A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.8.

 

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If the principal amount of any Note is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest and Additional Amounts, if any, on it cease to accrue.

 

If on a Redemption Date or the Maturity Date the Paying Agent holds cash sufficient to pay all of the principal and interest due on the Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest and Additional Amounts, if any, on such Notes cease to accrue.

 

SECTION 2.10              Treasury Notes .  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, the Guarantors or any of their Affiliates shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trust Officer actually knows are so owned shall be disregarded and the Trustee assumes no liability in relation to any other Notes.

 

The Issuer shall notify the Trustee, in writing, when it or any Guarantor or any of their Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired.  The Trustee may require an Officers’ Certificate, which shall promptly be provided upon receipt by the appropriate Responsible Officers of the requisite information, listing Notes owned by the Issuer, the Guarantors a Subsidiary of the Issuer or the Guarantors or an Affiliate of the Issuer or the Guarantors.

 

SECTION 2.11              Temporary Notes .  Until permanent Definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Definitive Notes upon receipt of an Issuer Order pursuant to Section 2.2.  The Officers’ Certificate shall specify the amount of temporary Definitive Notes to be authenticated and the date on which the temporary Definitive Notes are to be authenticated.  Temporary Definitive Notes shall be substantially in the form of permanent Definitive Notes but may have variations that the Issuer considers appropriate for temporary Definitive Notes.  Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate upon receipt of an Issuer Order pursuant to Section 2.2 permanent Definitive Notes in exchange for temporary Definitive Notes.

 

SECTION 2.12              Cancellation .  The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall promptly forward to the Trustee any Notes surrendered to them for transfer, exchange or payment.  The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, at the written direction of the Issuer, shall dispose of (subject to the record retention requirements of the Exchange Act) all Notes surrendered for transfer, exchange, payment or cancellation.  Upon completion of any disposal, the Trustee shall deliver a certificate of such disposal to the Issuer, unless the Issuer directs the Trustee in writing to deliver the cancelled Notes to the Issuer or the Company.  Subject to Section 2.8, the Issuer may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation.  If the Issuer shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.12.

 

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SECTION 2.13              Defaulted Interest .  If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Holder thereof on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Issuer for the payment of defaulted interest.  The Issuer shall promptly notify the Trustee and Paying Agent in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment (a “Default Interest Payment Date”), and at the same time the Issuer shall deposit with the Trustee or Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee or Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as in this Section 2.13; provided , however , that in no event shall the Issuer deposit monies proposed to be paid in respect of defaulted interest later than 10:00 a.m. New York City time on the proposed Default Interest Payment Date with respect to defaulted interest to be paid on the Note.  At least 15 days before the subsequent special record date, the Issuer shall mail to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid.

 

SECTION 2.14              CUSIP Numbers .  The Issuer in issuing the Notes may use “CUSIP” numbers, and if it does so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes.  The Issuer shall promptly notify the Trustee of any change in the CUSIP numbers.

 

SECTION 2.15              Deposit of Moneys .  Prior to 10:00 a.m. New York City time on each interest payment date and Maturity Date, the Issuer shall have deposited with the Trustee or its designated Paying Agent (which shall be the Paying Agent or its successor unless otherwise notified to the Issuer by the Trustee) in immediately available funds money sufficient to make cash payments, if any, due on such interest payment date or Maturity Date, as the case may be, on all Notes then outstanding.  Such payments shall be made by the Issuer in a timely manner which permits the Paying Agent to remit payment to the Holders on such interest payment date or Maturity Date, as the case may be.  Promptly upon receipt of such payment, the Paying Agent shall confirm by the medium chosen by the Paying Agent to the Issuer the receipt of such payment.

 

SECTION 2.16              Certain Matters Relating to Global Notes .  Members of or participants in the DTC (“Agent Members”) shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the DTC or its nominee, and the DTC or its nominee may be treated by the Issuer, the Guarantors, the Trustee, the Paying Agent, the Registrar and any agent of the Issuer or the Guarantors as the absolute owner of the Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Guarantors, the Trustee or any agent of the Issuer or the Guarantors from giving effect to any written certification, proxy or other authorization furnished by the DTC or its nominee

 

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or impair, as between the DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 

(a)           The Holder of any Global Note may grant proxies and otherwise authorize any Person, including DTC and its Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

SECTION 2.17              Record Date .  Unless otherwise set forth in this Indenture, the record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA § 316(c).

 

ARTICLE III

 

REDEMPTION

 

SECTION 3.1                 Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)           as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)           100% of the principal amount of the Notes being redeemed.

 

The Company shall certify to the Trustee the applicable Treasury Rate at the time of any such redemption.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2024 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

SECTION 3.2                 Notices to Trustee .  If the Issuer elects to redeem Notes pursuant to Paragraphs 8 or 9 of such Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of Notes to be redeemed at least 15 days prior to the giving of the notice contemplated by Section 3.4 (or such shorter period as the Trustee in its sole discretion shall determine).  The Issuer shall give notice of redemption as required under the relevant paragraph of the Notes pursuant to which such Notes are being redeemed.

 

SECTION 3.3                 Selection of Notes To Be Redeemed .  In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements

 

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of the principal securities exchange, if any, on which such Notes are listed, and/or in compliance with the requirements of the DTC, or if such Notes are not listed, on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate (and in such manner as complies with applicable legal and exchange requirements); although no Note of $2,000 in original principal amount or less shall be redeemed in part.  If any Note is to be redeemed in part only, notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.  The selections made by the Trustee pursuant to this Section 3.3 shall always be subject to Section 7.2(d).

 

SECTION 3.4                 Notice of Redemption .  At least 30 days but not more than 60 days before a Redemption Date or a Tax Redemption Date, as applicable, the Issuer shall, so long as the Notes are in global form, publish a redemption notice in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, publish in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort ) or, to the extent and in the manner permitted by such rules, post such notice on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable, or in the case of Definitive Notes, in addition to such publication, mail such notice to Holders (with a copy to the Trustee) by first-class mail, postage prepaid, at their respective addresses as they appear on the registration books of the Registrar.  At the Issuer’s request made at least 45 days before the Redemption Date or a Tax Redemption Date, as applicable (or such shorter period as the Trustee in its sole discretion shall determine), the Paying Agent shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense; provided , however , that the Issuer shall deliver to the Trustee (in advance) an Officers’ Certificate requesting that the Trustee give such notice and setting forth in full the information to be stated in such notice as provided in the following items.  Each notice for redemption shall identify the Notes to be redeemed and shall state:

 

(a)           the Redemption Date or the Tax Redemption Date, as applicable;

 

(b)           the Redemption Prices and the amount of accrued and unpaid interest, if any, and Additional Amounts, if any, to be paid (subject to the right of Holders of record on the relevant Record Date to receive interest and Additional Amounts, if any, due on the relevant interest payment date);

 

(c)           the name and address of the designated Paying Agent;

 

(d)           that Notes called for redemption must be surrendered to the designated Paying Agent to collect the Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any;

 

(e)           that, unless the Issuer defaults in making the redemption payment pursuant to the terms of this Indenture, interest and Additional Amounts, if any, on Notes called for redemption

 

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cease to accrue on and after the Redemption Date or the Tax Redemption Date, as applicable, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Notes redeemed;

 

(f)            (i) if any Global Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, interest and Additional Amounts, if any, shall cease to accrue on the portion called for redemption, and upon surrender of such Global Note (if applicable), the Global Note with a notation on Schedule A thereof adjusting the principal amount thereof to be equal to the unredeemed portion, will be returned and (ii) if any Definitive Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed, and that, after the Redemption Date, upon surrender of such Definitive Note, a new Definitive Note or Notes in aggregate principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof, upon cancellation of the original Note;

 

(g)           if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption;

 

(h)           the paragraph of the Notes pursuant to which the Notes are to be redeemed; and

 

(i)            the CUSIP numbers, and that no representation is made as to the correctness or accuracy of the CUSIP numbers, if any, listed in such notice or printed on the Notes.

 

Prior to the giving of any notice of redemption pursuant to Paragraph 9 of the Notes, the Issuer will deliver to the Trustee (a) an Officers’ Certificate of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (b) an Opinion of Counsel qualified under the laws of the relevant jurisdiction to the effect that the Issuer has or will become obligated to pay such Additional Amounts as a result of a change in tax law, and that the Issuer cannot avoid such obligation by taking reasonable measures available to it.

 

SECTION 3.5                 Effect of Notice of Redemption .  Once notice of redemption is given in accordance with Section 3.4, Notes called for redemption become due and payable on the Redemption Date or the Tax Redemption Date, as applicable, and at the Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any.  Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued and unpaid interest thereon, if any, and Additional Amounts, if any, to the Redemption Date or Tax Redemption Date, as applicable), but installments of interest, the maturity of which is on or prior to the Redemption Date or the Tax Redemption Date, as applicable, shall be payable to Holders of record at the close of business on the relevant Record Dates.

 

SECTION 3.6                 Deposit of Redemption Price .  Prior to 10:00 a.m. New York City time on the Redemption Date or the Tax Redemption Date, as applicable, the Issuer shall deposit with the Trustee or its designated Paying Agent (which shall be the Paying Agent or its

 

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successor unless otherwise notified to the Issuer by the Trustee) cash sufficient to pay the Redemption Price plus accrued and unpaid interest (subject to, as provided in the Notes, the right of Holders to receive interest on the relevant interest payment date), if any, and Additional Amounts, if any, of all Notes to be redeemed on that date other than Notes or portion of Notes called for redemption that have been delivered by the Issuer to the Trustee for cancellation.  The designated Paying Agent shall promptly return to the Issuer any cash so deposited which is not required for that purpose upon the written request of the Issuer.  Promptly upon receipt of such payment the Paying Agent shall confirm by the medium chosen by the Paying Agent to the Issuer the receipt of such payment.

 

If the Issuer complies with the preceding paragraph, then, unless the Issuer defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, and Additional Amounts, if any, interest and Additional Amounts on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date or Tax Redemption Date, whether or not such Notes are presented for payment.  With respect to Definitive Notes, if a Definitive Note is redeemed on or after an interest Record Date but on or prior to the related interest payment date, then any accrued and unpaid interest, if any, and Additional Amounts, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date.  If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuer to comply with the preceding paragraph, interest, and Additional Amounts, if any, shall be paid on the unpaid principal, from the Redemption Date or the Tax Redemption Date, as applicable, until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.1.

 

SECTION 3.7                 Notes Redeemed in Part .  Upon surrender and cancellation of a Definitive Note that is redeemed in part, the Issuer shall execute and the Trustee shall authenticate for the Holder (at the Issuer’s expense) a new Definitive Note equal in principal amount to the unredeemed portion of the Definitive Note surrendered and canceled; provided , however , that each such Definitive Note shall be in a principal amount at maturity of $2,000 or integral multiples of $1,000 in excess thereof.  Upon surrender of a Global Note that is redeemed in part, the Paying Agent shall promptly forward such Global Note to the Trustee who shall make a notation on Schedule A thereof to reduce the principal amount of such Global Note to an amount equal to the unredeemed portion of the Global Note surrendered; provided , however , that each such Global Note shall be in a principal amount at maturity of $2,000 or integral multiples of $1,000 in excess thereof.

 

SECTION 3.8                 Special Tax Redemption .  The Issuer will be entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

(a)           a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

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(b)           any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes; provided , that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.1                 Payment of Notes .

 

(a)           The Issuer shall pay the principal, premium, if any, interest and Additional Amounts, if any, on the Notes in the manner provided in such Notes and this Indenture.  An installment of principal of or interest, premium or Additional Amounts on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent holds prior to 10:00 a.m. New York City time on that date money deposited by the Issuer in immediately available funds and designated for, and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture.

 

(b)           The Issuer shall pay, to the extent such payments are lawful, interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and on overdue installments of interest (without regard to any applicable grace periods), on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

SECTION 4.2                 Maintenance of Office or Agency .  The Issuer shall maintain the office or agency (which office may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) required under Section 2.3 where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.1.  The Issuer hereby initially designates the office of the Trustee, acting through its office at 100 Wall Street, Suite 1600, New York, New York 10005, as its office or agency as required under Section 2.3 hereof.  If the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such exchange so require, the Issuer will appoint BNP Paribas Securities Services, or such other Person located in

 

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Luxembourg and reasonably acceptable to the Trustee (reasonableness to be determined objectively), as an additional paying and transfer agent.

 

SECTION 4.3                 Limitation on Incurrence of Indebtedness .

 

(a)           The Issuer and the Company shall not, and shall not permit any of their Subsidiaries to, Incur, directly or indirectly, any Indebtedness; provided , however, that the Company and any Subsidiary may Incur Indebtedness (and the Company and any Subsidiary may Incur Acquired Indebtedness) if on the date thereof:

 

(1)           the Consolidated Coverage Ratio of the Company is at least 2.0 to 1.0; and

 

(2)           no Default or Event of Default will have occurred and be continuing or would occur as a consequence of Incurring the Indebtedness.

 

(b)           The foregoing limitations contained in paragraph (a) do not apply to the Incurrence of any of the following Indebtedness:

 

(1)           Indebtedness Incurred as revolving credit facilities under the Credit Facility in an aggregate amount not to exceed $1.7 billion outstanding at any time;

 

(2)           Indebtedness in respect of Receivables Financings in an aggregate principal amount which, together with all other Indebtedness in respect of Receivables Financings outstanding on the date of such Incurrence (other than Indebtedness permitted by paragraph (a) or clause (3) of this paragraph (b)), does not exceed 85% of the sum of (1) the total amount of accounts receivables shown on the Company’s most recent consolidated quarterly balance sheet, plus (2) without duplication, the total amount of accounts receivable already subject to a Receivables Financing;

 

(3)           Indebtedness of the Company owed to and held by another Guarantor, Indebtedness of a Wholly Owned Subsidiary owed to and held by another Wholly Owned Subsidiary or Indebtedness of a Wholly Owned Subsidiary owing to and held by the Company; provided , however , that any subsequent issuance or transfer of any Capital Stock that results in any such Indebtedness being held by a Person other than the Company or another Wholly Owned Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or another Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the Company or the Subsidiary, as the case may be;

 

(4)           Indebtedness in respect of the Notes issued on the Closing Date, the related Note Guarantees by the Company and the other Guarantors, Indebtedness in respect of the Issuer’s 4.125% Senior Notes due 2020 issued on the Closing Date and the related Guarantees of the 4.125% Senior Notes due 2020 by the Company and the other Guarantors ;

 

(5)           Capital Lease Obligations and Indebtedness Incurred, in each case, to provide all or a portion of the purchase price or cost of construction of an asset or, in the case

 

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of a Sale and Leaseback Transaction, to finance the value of such asset owned by the Company or a Subsidiary;

 

(6)           Indebtedness (other than Indebtedness of the type covered by clause (1) or clause (2)) outstanding on the Closing Date after giving effect to the application of proceeds from the Notes;

 

(7)           Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (4) or (6) of this paragraph (b);

 

(8)           Hedging Obligations entered into in the ordinary course of the business and not for speculative purposes as determined in good faith by the Company;

 

(9)           customer deposits and advance payments received from customers for goods purchased in the ordinary course of business;

 

(10)         Indebtedness arising under the Cash Management Arrangements; and

 

(11)         Indebtedness Incurred by the Company or a Subsidiary in an aggregate principal amount which, together with all other Indebtedness of the Company and its Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by paragraph (a) or clauses (1) through (10) of this paragraph (b)), does not exceed $1.5 billion.

 

(c)           For purposes of determining compliance with the foregoing covenant:

 

(1)           in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify and from time to time may reclassify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the above clauses, provided that any Indebtedness outstanding on the Closing Date and Indebtedness Incurred under clause (b)(5) above may not be reclassified to clause (a) above; and

 

(2)           an item of Indebtedness may be divided and classified, or reclassified, in more than one of the types of Indebtedness described above, provided that any Indebtedness outstanding on the Closing Date and Indebtedness Incurred under clause (b)(5) above may not be reclassified to clause (a) above.

 

(d)           If during any period the Notes have achieved and continue to maintain Investment Grade Status and no Event of Default has occurred and is continuing (such period is referred to herein as an “Investment Grade Status Period”), then upon notice by the Company to the Trustee by the delivery of an Officers’ Certificate that it has achieved Investment Grade Status, this covenant will be suspended and will not during such period be applicable to the Company and its Subsidiaries and shall only again be applicable if such Investment Grade Status Period ends.

 

No action taken during an Investment Grade Status Period or prior to an Investment Grade Status Period in compliance with this Section 4.3 will require reversal or constitute a

 

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default under the Notes in the event that this Section 4.3 is subsequently reinstated or suspended, as the case may be.

 

SECTION 4.4                 Limitation on Liens .  The Issuer and the Company may not, and may not permit any Guarantor or any of their respective Subsidiaries to directly, or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock), whether owned on the date hereof or acquired after that date, securing any Indebtedness, unless contemporaneously with (or prior to) the Incurrence of the Liens effective provision is made to secure the Indebtedness due under this Indenture and the Notes, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

 

SECTION 4.5                 Ownership of the Issuer .  The Company will continue to directly or indirectly maintain 100% ownership of the Capital Stock of the Issuer or any permitted successor of the Issuer, provided , that any permitted successor of the Company may succeed to the Company’s ownership of such Capital Stock.

 

The Company will cause the Issuer or its successor to engage only in those activities that are necessary, convenient or incidental to issuing and selling the Notes and any additional Indebtedness permitted under Section 4.3 (including the Issuer’s Guarantee of the Credit Facility and any Additional Notes), and advancing or distributing the proceeds thereof to the Company and its Subsidiaries and performing its obligations relating to the Notes and any such additional Indebtedness, pursuant to the terms thereof and of this Indenture and any other applicable indenture.

 

SECTION 4.6                 Existence .  Except as permitted by Article V, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the existence, rights (charter and statutory) and franchises of the Company, the Issuer and each other Guarantor; provided , however , that the Company shall not be required to preserve any such existence, right or franchise if the Board of Directors of the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof at the time of such loss is not disadvantageous in any material respect to the Holders.

 

SECTION 4.7                 Maintenance of Properties .  Except as permitted by Article V, the Company shall cause all properties used or useful in the conduct of its business or the business of any Subsidiary of the Company to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, as determined by the Company, or its Responsible Officers, or any Subsidiary, or its Responsible Officers, having managerial responsibility for any such property, in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

 

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SECTION 4.8                 Payment of Taxes and Other Claims .  The Company and the Guarantors will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries or upon the income, profits or property of the Company or any of its Subsidiaries (including satisfying any withholding tax obligations), and (b) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the property of the Company or the Guarantors or any of their Subsidiaries; provided, however, that the Company or the Guarantors shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves are maintained in accordance with Accounting Principles.

 

SECTION 4.9                 Maintenance of Insurance .  The Company shall, and shall cause its Subsidiaries to, keep at all times all of their material properties which are of an insurable nature insured against loss or damage pursuant to self-insurance arrangements with insurers believed by the Company to be responsible to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in accordance with good business practice.  The Company shall, and shall cause its Subsidiaries to, use the proceeds from any such insurance policy to repair, replace or otherwise restore the property to which such proceeds relate, except to the extent that a different use of such proceeds is, as determined by the Company, or any Subsidiary having managerial responsibility for any such property, in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

 

SECTION 4.10              Reports .  For so long as any Notes are outstanding, the Company will provide the Trustee with:

 

(1)           copies of the annual reports and of the information, documents and other reports, and such summaries thereof, as may be required by the TIA at the times and in the manner provided by the TIA;

 

(2)           its annual financial statements and related notes thereto for the most recent two fiscal years prepared in accordance with U.S. GAAP (or IFRS or any other internationally generally acceptable accounting standard in the event the Company is required by applicable law to prepare its financial statements in accordance with IFRS or such other standard or is permitted and elects to do so, with appropriate reconciliation to U.S. GAAP, unless not then required under the rules of the SEC) and including segment data, together with an audit report thereon, together with a discussion of the “Operating Results” and “Liquidity” for such fiscal years prepared in a manner substantially consistent with the “Operating and Financial Review and Prospects” required by Form 20-F under the Exchange Act (or any replacement or successor form) which is incorporated by reference in the Offering Memorandum from the Company’s Annual Report on Form 20-F for the year ended December 31, 2013 and a “Business Summary of the Financial Year” and discussion of “Business Segments” provided in a manner consistent with its annual report, a description of “Related Party Transactions,” and a description of Indebtedness, within 90 days of the end of each fiscal year; and

 

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(3)           quarterly financial information as of and for the period from the beginning of each year to the close of each quarterly period (other than the fourth quarter), together with comparable information for the corresponding period of the preceding year, and a summary “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to the extent and in the form required under the Exchange Act providing a brief discussion of the results of operations for the period within 45 days following the end of the fiscal quarter.

 

The Company shall also comply with the other provisions of Section 314(a) of the TIA.  In addition, so long as the Notes remain outstanding and during any period when the Issuer or the Company is not subject to Section 13 or 15(d) of the Exchange Act other than by virtue of the exemption therefrom pursuant to Rule 12g3-2(b), the Company will furnish to any Holder or beneficial owner of Notes initially offered and sold in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act pursuant to such rule and any prospective purchaser in the United States designated by such Holder or beneficial owner, upon request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

If and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange, copies of such reports shall also be available at the specified office of the Listing Agent in Luxembourg.

 

Deliveries of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s, the Company’s or any Guarantor’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).  The Trustee shall have no obligation to review such reports to determine if the information required by this Section 4.10 is contained therein.

 

SECTION 4.11              Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

Within 30 days following a Change of Control Triggering Event, the Issuer will mail a notice to each Holder with a copy to the Trustee stating:

 

(1)           that a Change of Control Triggering Event has occurred and that such Holder has the right to require the Issuer to purchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

 

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(2)           the circumstances and relevant facts regarding such Change of Control Triggering Event (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control Triggering Event);

 

(3)           the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed);

 

(4)           that each Note will be subject to repurchase only in amounts of $2,000 or integral multiples of $1,000 in excess thereof; and

 

(5)           the instructions determined by the Issuer, consistent with the covenant described hereunder, that a Holder must follow in order to have its Notes purchased.

 

(6)           that any Note not tendered will continue to accrue interest;

 

(7)           that, unless the Issuer defaults in the payment of the Change of Control purchase price, any Notes accepted for payment shall cease to accrue interest after the repurchase date;

 

(8)           that Holders accepting the offer to have their Notes repurchased pursuant to a change of control offer will be required to surrender the Notes to the Paying Agent or any other Agent specified in the notice at the address specified in the notice prior to the close of business on the Business Day preceding the repurchase date;

 

(9)           that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered;

 

(10)         any other procedures that a holder must follow to accept a change of control offer or effect withdrawal of such acceptance; and

 

(11)         the name and address of the Paying Agent.

 

On the repurchase date, the Issuer shall, to the extent lawful:

 

(1)           accept for payment Notes or portions thereof validly tendered pursuant to the change of control offer;

 

(2)           deposit with the Paying Agent money sufficient to pay the Change of Control purchase price in respect of all Notes or portions thereof so tendered; and

 

(3)           deliver or cause to be delivered to the Trustee Notes so accepted together with an Officers’ Certificate stating the Notes or portions thereof tendered to the Issuer.

 

The Paying Agent shall promptly mail to each Holder of Notes so accepted payment in an amount equal to the purchase price for such Notes, and the Issuer shall execute and issue, and the Trustee shall promptly authenticate and mail to such Holder, a new Note equal in principal amount to any unpurchased portion of the Notes surrendered; provided that each such

 

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new Note shall be issued in an original principal amount in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 4.11.  To the extent that the provisions of any securities laws or regulations or applicable listing requirements conflict with the provisions of this Section 4.11, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.11 by virtue thereof.

 

SECTION 4.12              Additional Amounts .  At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts pursuant to Paragraph 2 of the Notes (the “Additional Amounts”) with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.  The Issuer shall indemnify the Trustee and the Paying Agent for, and hold them harmless against, any loss, liability or expense incurred without negligence or willful misconduct on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished to them pursuant to this Section 4.12.

 

The Issuer and each Guarantor (as applicable) will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law.  The Issuer and each Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copy to the Trustee.

 

If the Issuer or the Guarantors conduct business in any jurisdiction (an “Additional Taxing Jurisdiction”) other than a Relevant Taxing Jurisdiction and, as a result, are required by the law of such Additional Taxing Jurisdiction to deduct or withhold any amount on account of taxes imposed by such Additional Taxing Jurisdiction from payments under the Notes which would not have been required to be so deducted or withheld but for such conduct of business in such Additional Taxing Jurisdiction, the Additional Amounts provision described above shall be considered to apply to such Holders as if references in such provision to “Taxes” included taxes imposed by way of deduction or withholding by any such Additional Taxing Jurisdiction (or any political subdivision thereof or taxing authority therein).

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities

 

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related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein, or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations of this Section 4.12 and Paragraph 2 of the Notes will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any successor Person to the Issuer or the Guarantors.

 

Whenever in this Indenture or in the Notes or any Note Guarantee there is mentioned, in any context, the payment of principal, purchase price, premium or interest, if any, or any other amount payable under or with respect to any Note, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

SECTION 4.13              Compliance Certificate; Notice of Default .  The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year an Officers’ Certificate stating whether or not to the best knowledge of the signor thereof, the Issuer and the Guarantors, as the case may be, have complied with all conditions and covenants under this Indenture, whether a Default or an Event of Default has occurred during such period, and, if a Default or an Event of Default has occurred during such period, specifying all such Events of Default and the nature thereof of which such Responsible Officer has knowledge.  Upon becoming aware of, and as of such time that the Issuer should reasonably have become aware of, a Default, the Company also shall deliver to the Trustee, within 30 days thereafter, written notice of any events which would constitute a Default, their status and what action the Issuer is taking or proposes to take in respect thereof, and, in the case of a Default in the payment of interest, principal, redemption payments or any other amount due on the Notes or the Guarantees, such same notice to the Paying Agent.

 

SECTION 4.14              Limitation on Sale and Leaseback Transactions .  The Issuer and the Company may not, and may not permit any Guarantor or any Subsidiary to, enter into any Sale and Leaseback Transaction unless:

 

(1)           the Issuer or such Guarantor or Subsidiary, as the case may be, could have created a Lien on the property subject to such Sale and Leaseback Transaction if such transaction was financed with Indebtedness without securing the Notes pursuant to Section 4.4; and

 

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(2)           the Issuer or such Guarantor or Subsidiary, as the case may be, can Incur an amount of Indebtedness equal to the Attributable Debt in respect of such Sale and Leaseback Transaction.

 

ARTICLE V

 

SUCCESSOR ISSUER OR GUARANTOR

 

SECTION 5.1                 Limitation on Mergers and Sales of Assets .  The Issuer and the Company may not, and may not permit any other Guarantor to consolidate or merge with or into (whether or not the Issuer or such Guarantor is the Surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets in one or more related transactions, to another Person unless:

 

(1)           the Surviving Person is an entity organized and existing under the laws of Germany, the United Kingdom, any other member state of the European Union (as of December 31, 2003), Luxembourg, Switzerland, the United States of America, or any State thereof or the District of Columbia, or the jurisdiction of formation of the Issuer or any Guarantor; or, if the Surviving Person is an entity organized and existing under the laws of any other jurisdiction, the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the rights of the Holders of the Notes, would not be affected adversely as a result of the law of the jurisdiction of organization of the Surviving Person, insofar as such law affects the ability of the Surviving Person to pay and perform its obligations and undertakings in connection with the Notes (in a transaction involving the Issuer) or its Note Guarantee or the ability of the Surviving Person to obligate itself to pay and perform such obligations and undertakings or the ability of the Holders to enforce such obligations and undertakings;

 

(2)           the Surviving Person (if other than the Issuer or a Guarantor) shall expressly assume, (A) in a transaction or series of transactions involving the Issuer, by a supplemental indenture in a form satisfactory to the Trustee, all of the obligations of the Issuer or (B) in a transaction or series of transactions involving a Guarantor (including the Company), by a Guarantee Agreement, in a form satisfactory to the Trustee, all of the obligations of such Guarantor under its Note Guarantee;

 

(3)           at the time of and immediately after such transaction, no Default or Event of Default shall have occurred and be continuing; and

 

(4)           the Issuer or such Guarantor delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer, assignment, sale, lease, conveyance or other disposition and such supplemental indenture and Guarantee Agreement, if any, comply with this Indenture.

 

SECTION 5.2                 Successor Entity Substituted .  Upon any consolidation or merger by the Issuer, the Company or any other Guarantor with or into any other Person, or any conveyance, transfer, sale, assignment, lease or other disposition by the Issuer, the Company or any other Guarantor in one or more transactions, of substantially all of its properties and assets as an

 

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entirety to any Person in accordance with Section 5.1, then if such transaction involves the Company, the Surviving Person shall expressly assume in a supplemental indenture in a form satisfactory to the Trustee, all of the obligations of the Company under the Indenture and in any such case the Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer or such Guarantor under this Indenture with the same effect as if such Surviving Person had been named as the Issuer or had been a Guarantor herein, and thereafter the Issuer or such Guarantor shall be discharged from all obligations and covenants hereunder and under the Notes.

 

Such Surviving Person (if the successor of the Issuer) may cause to be signed, and may issue either in its own name or in the name of the Issuer, any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such Surviving Person instead of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by the Responsible Officers of the Issuer to the Trustee for authentication pursuant to such provisions and any Notes which such Surviving Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions.  All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof.

 

In case of any such consolidation, merger, sale, assignment, transfer, conveyance, lease, or other disposition such changes in phraseology and form may be made in the Notes thereafter to be issued as may be appropriate.

 

SECTION 5.3                 Substitution of the Issuer .  The Company, any other Guarantor or a Finance Subsidiary (a “Successor”) may assume the obligations of the Issuer under the Notes, by executing and delivering to the Trustee (a) a supplemental indenture which subjects such person to all of the provisions of the Indenture and (b) an Opinion of Counsel to the effect that such supplemental indenture has been duly authorized and executed by such Person, and constitutes the legal, valid, binding and enforceable obligation of such Person, subject to customary exceptions; provided , that (i) the Successor is formed under the laws of the United States of America, or any State thereof or the District of Columbia, Germany, the United Kingdom or any other member state of the European Union as of December 31, 2003 and (ii) no Additional Amounts would be or become payable with respect to the Notes at the time of such assumption, or as result of any change in the laws of the jurisdiction of formation of such Successor that was reasonably foreseeable at such time.  The Successor shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture with the same effect as if it were the Issuer thereunder, and the former Issuer shall be discharged from all obligations and covenants under this Indenture and the Notes.

 

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ARTICLE VI

 

DEFAULT AND REMEDIES

 

SECTION 6.1                 Events of Default .  Whenever used herein with respect to the Notes, “Event of Default” means any one of the following events which shall have occurred and be continuing:

 

(1)           failure for 30 days to pay interest on the Notes, including any Additional Amounts in respect thereof, when due; or

 

(2)           failure to pay principal of or premium, if any, on the Notes when due, whether at maturity, upon redemption, by declaration or otherwise; or

 

(3)           failure to observe or perform any other covenant contained in this Indenture for 60 days after notice as provided in this Indenture; or

 

(4)           default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is Guaranteed by the Company), whether such Indebtedness or Guarantee now exists or is Incurred after the Closing Date, if (A) such default results in the acceleration of such Indebtedness prior to its express maturity or will constitute a default in the payment of such Indebtedness and (B) the principal amount of any such Indebtedness that has been accelerated or not paid at maturity, when added to the aggregate principal amount of all other such Indebtedness, at such time, that has been accelerated or not paid at maturity, exceeds $100 million; or

 

(5)           any final judgment or judgments (not covered by insurance) which can no longer be appealed for the payment of money in excess of $100 million shall be rendered against the Issuer or the Company or any of its Subsidiaries and shall not be discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect; or

 

(6)           any Note Guarantee shall cease to be in full force and effect in accordance with its terms for any reason except pursuant to the terms of this Indenture governing the release of Note Guarantees or the satisfaction in full of all the obligations thereunder or shall be declared invalid or unenforceable other than as contemplated by its terms, or any Guarantor shall repudiate, deny or disaffirm any of its obligations thereunder; or

 

(7)           the Company, the Guarantors, the Issuer or any of the Company’s Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:

 

(a)           commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or makes a general assignment for the benefit of or a composition with its creditors or, for any of the reasons set out in Sections 17-19 of the German Insolvency Code ( Insolvenzordnung ), files for insolvency ( Antrag auf Eröffnung eines

 

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Insolvenzver fahrens ) or the board of directors ( Geschäftsführer ) is required by law to file for insolvency, a creditor files for the opening of insolvency proceedings and such filing is not frivolous and not dismissed within a period of one month by the competent insolvency court, or the competent court takes any of the actions set out in Section 21 of the German Insolvenzordnung or a competent court institutes insolvency proceedings ( Eröffnung des Insolvenzverfahrens ) or denies a petition for commencement of insolvency proceeding by reason of insufficient assets,

 

(b)           commences a voluntary case,

 

(c)           consents to the entry of an order for relief against it in an involuntary case,

 

(d)           consents to the appointment of a custodian of it or for all or substantially all of its property,

 

(e)           makes a general assignment for the benefit of its creditors, or

 

(f)            takes any corporate action to authorize or effect any of the foregoing.

 

A default under clause (3) of this paragraph will not constitute an Event of Default unless the Trustee or Holders of 25% in principal amount of the outstanding Notes notify the Issuer and the Company of such default and such default is not cured within the time specified in clause (3).

 

SECTION 6.2                 Acceleration .  If an Event of Default (other than an Event of Default described in clause (7) of Section 6.1 hereof) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the outstanding Notes by notice to the Issuer, the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, and Additional Amounts, if any, on all the Notes to be due and payable.  Upon such a declaration, such principal, premium, accrued and unpaid interest, and Additional Amounts, if any, will be due and payable immediately.  If an Event of Default described in clause (7) of section 6.1 above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

 

SECTION 6.3                 Other Remedies .  If an Event of Default of which the Trustee is aware occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or, premium, if any, interest, and Additional Amounts, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

 

SECTION 6.4                 The Trustee May Enforce Claims Without Possession of Notes .  All rights of action and claims under this Indenture or the Notes may be prosecuted and

 

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enforced by the Trustee (without liability) without the possession of any of the Notes or the production thereof in any proceeding relating thereto.

 

SECTION 6.5                 Rights and Remedies Cumulative .  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy.

 

SECTION 6.6                 Delay or Omission Not Waiver .  No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by the Indenture or by law to the Trustee or to the Holders of Notes may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Notes, in each case in accordance with the terms of this Indenture.

 

SECTION 6.7                 Waiver of Past Defaults .  Subject to Sections 2.10, 6.10 and 9.2, at any time after a declaration of acceleration with respect to the Notes as described in Section 6.2, the Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Issuer and to the Trustee, may waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such declaration of acceleration with respect to the Notes and its consequences if (i) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.  Such waiver shall not excuse a continuing Event of Default in the payment of interest, premium, if any, principal or Additional Amounts, if any, on such Note held by a non-consenting Holder, or in respect of a covenant or a provision which cannot be amended or modified without the consent of each Holder affected thereby.  The Issuer shall promptly deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders has consented to such waiver and attaching copies of such consents.  When a Default or Event of Default is waived, it is cured and ceases.

 

SECTION 6.8                 Control by Majority .  Subject to Section 2.10, the Holders of not less than a majority in principal amount of the outstanding Notes may, by written notice to the Trustee, direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it.  Subject to Section 7.1, however, the Trustee may refuse to follow any direction that conflicts with any law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of another Holder of Notes, or that may involve the Trustee in personal liability; provided , however , that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.  Prior to taking any action under this Indenture, the Trustee will be entitled to indemnification

 

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satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action in accordance with Section 7.7.

 

SECTION 6.9                 Limitation on Suits .  Subject to Section 6.10, no Holder of Notes may pursue any remedy with respect to this Indenture or the Notes unless:

 

(1)           such Holder has previously given the Trustee notice that an Event of Default is continuing;

 

(2)           Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;

 

(3)           such Holders have offered the Trustee reasonable security or indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(4)           the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of satisfactory security or indemnity; and

 

(5)           the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

 

SECTION 6.10              Rights of Holders To Receive Payment .  Notwithstanding any other provision of this Indenture (including, without limitation, Section 8.9 hereof), the right of any Holder to receive payment of principal of, premium, if any, interest, and Additional Amounts, if any, on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

SECTION 6.11              Collection Suit by Trustee .  If an Event of Default in payment of principal, premium, if any, interest and Additional Amounts, if any, specified in clause (1) or clause (2) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount of principal, premium, if any, and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.

 

SECTION 6.12              Trustee May File Proofs of Claim .  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amount due to the Trustee under Section 7.7, accountants and experts) and the Holders allowed in any judicial proceedings relating to the Company, its creditors or its property or other obligor on the Notes, its creditors and its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any

 

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Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee under Section 7.7.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties which the Holders of the Notes may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.

 

SECTION 6.13              Priorities .  If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:

 

First :  to the Trustee and the Agents for amounts due under Section 7.7, including (but not limited to) payment of all compensation, fees, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second :  to Holders for amounts due and unpaid on the Notes for principal, premium, if any, interest and Additional Amounts, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, interest and Additional Amounts, if any, respectively; and

 

Third :  to the Issuer, the Guarantors or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct.

 

The Trustee, upon prior notice to the Issuer, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.13; provided that the failure to give any such notice shall not affect the establishment of such record date or payment date for Holders pursuant to this Section 6.13.

 

SECTION 6.14              Restoration of Rights and Remedies .  If the Trustee or any Holder of any Note has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Issuer, the Trustee and the Holders of Notes shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders of Notes shall continue as though no such proceeding had been instituted.

 

SECTION 6.15              Undertaking for Costs .  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party

 

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litigant.  This Section 6.15 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.10, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes.

 

SECTION 6.16              Notices of Default .  If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder of Notes notice of the Default within 90 days after it has become known to the Trustee.  Except in the case of a Default in the payment of principal of, premium, if any, interest and Additional Amounts, if any, on any Note, the Trustee may withhold notice if and so long as a committee of Trust Officers determines that withholding notice is in the interests of such Holders of Notes.

 

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1                 Duties of Trustee .  If an Event of Default actually known to a Trust Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.  Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any of the Holders of Notes, unless they shall have offered to the Trustee reasonable security and indemnity satisfactory to the Trustee against any loss, liability or expense in accordance with the sixth paragraph of Section 7.7.

 

(a)           Except during the continuance of an Event of Default actually known to the Trustee:

 

(1)           The Trustee and the Agents will perform only those duties as are specifically set forth herein and no others and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Agents.

 

(2)           In the absence of willful misconduct on their part, the Trustee and the Agents may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions and such other documents delivered to them pursuant to Section 11.2 and conforming to the requirements of this Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

 

(b)           The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(1)           This paragraph does not limit the effect of subsection (a) of this Section 7.1.

 

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(2)           Neither the Trustee nor Agent shall be liable for any error of judgment made in good faith by a Trust Officer of such Trustee or Agent, unless it is proved that the Trustee or such Agent was negligent in ascertaining the pertinent facts.

 

(3)           The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.2, 6.7 or 6.8.

 

(c)           No provision of this Indenture shall require the Trustee or any Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders if it shall have reasonable grounds for believing that repayment of such funds is not assured to it or it does not receive an indemnity satisfactory to it in its sole discretion against such risk, liability, loss, fee or expense which might be incurred by it in the performance of any of its duties hereunder.

 

(d)           Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to the first paragraph and subsections (a), (b) and (c) of this Section 7.1.

 

(e)           Neither the Trustee nor the Agents shall be liable for interest on any money received by it except as the Trustee and any Agent may agree in writing with the Issuer.  Money held in trust by the Trustee or any Agent need not be segregated from other funds except to the extent required by law.

 

(f)            Any provision hereof relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

 

SECTION 7.2                 Rights of Trustee .  Subject to Section 7.1:

 

(a)           The Trustee and each Agent may rely conclusively on and shall be protected from acting or refraining from acting based upon any document believed by them to be genuine and to have been signed or presented by the proper Person.  Neither the Trustee nor any Agent shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document.  The Trustee shall not be deemed to have notice or any knowledge of any matter (including without limitation Defaults or Events of Default) unless a Trust Officer assigned to and working in the Trustee’s Corporate Trust Office which is administering this Indenture has actual knowledge thereof or unless written notice thereof is received by the Trustee, attention:  Corporate Trust and such notice clearly references the Notes, the Issuer or this Indenture.

 

(b)           Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers’ Certificate, Issuer Order (as applicable) or an Opinion of Counsel or both.  Neither the Trustee nor any Agent shall be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

 

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(c)           The Trustee and any Agent may act through their attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee or such Agent) appointed with due care.

 

(d)           The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers conferred upon it by this Indenture; provided , however , that the Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

 

(e)           The Trustee or any Agent may consult with counsel of its selection and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder and in accordance with the advice or opinion of such counsel.

 

(f)            Except to the extent provided for in Section 9.1 and subject to Section 9.2 hereof, the Trustee may (but shall not be obligated to), without the consent of the Holders, give any consent, waiver or approval required by the terms hereof, but shall not without the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding (i) give any consent, waiver or approval or (ii) agree to any amendment or modification of this Indenture, in each case, that shall have a material adverse effect on the interests of any Holder.  The Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any consent, waiver, approval, amendment or modification shall have a material adverse effect on the interests of any Holder.

 

SECTION 7.3                 Individual Rights of Trustee .  The Trustee or any Agent in its respective individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, the Guarantors, their Subsidiaries, or their respective Affiliates with the same rights it would have if it were not the Trustee or an Agent.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights.

 

SECTION 7.4                 Trustee’s Disclaimer .  The Trustee and the Agents shall not be responsible for and make no representation as to the validity, effectiveness or adequacy of this Indenture, the offering materials related to the Notes or the Notes; they shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision hereof; and they shall not be responsible for any statement or recital herein of the Issuer or the Guarantors or any document issued in connection with the sale of Notes or any statement in the Notes other than the Trustee’s certificate of authentication.

 

SECTION 7.5                 Notice of Default .  If an Event of Default occurs and is continuing and a Trust Officer of the Trustee receives actual notice of such event, the Trustee shall mail to each Holder, as their names and addresses appear on the list of Holders described in Section 2.5, notice of the uncured Default or Event of Default within 90 days after the Trustee receives such notice.  Except in the case of a Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Trust Officers determines that withholding the notice is in the interest of the Holders.

 

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SECTION 7.6                 Reports by Trustee to Holders of the Notes .  Within 60 days after each May 15 beginning with May 15, 2015, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with TIA § 313(b).  The Trustee shall also transmit by mail all reports as required by TIA § 313(c).

 

A copy of each report at the time of its mailing to the Holders shall be mailed to the Issuer and filed with the SEC and each stock exchange on which the Issuer has informed the Trustee in writing the Notes are listed in accordance with TIA § 313(d).  The Issuer shall promptly notify the Trustee when the Notes are listed on any stock exchange and of any delisting thereof.

 

SECTION 7.7                 Compensation and Indemnity .  The Issuer shall pay to the Trustee and Agents from time to time such compensation as the Issuer and the Trustee or Agent, as applicable, shall from time to time agree in writing for its acceptance of this Indenture and services hereunder.  The Trustee’s and the Agents’ compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer shall reimburse the Trustee and Agents upon request for all reasonable and duly documented and invoiced disbursements, expenses and advances (including reasonable fees and expenses of counsel) incurred or made by it in addition to the compensation for their services, except any such disbursements, expenses and advances as may be attributable to the Trustee’s or any Agent’s negligence, willful misconduct or bad faith.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s and Agents’ accountants, experts and counsel and any taxes or other expenses incurred by a trust created pursuant to Section 8.4 hereof.

 

The Issuer agrees to pay the fees and expenses of the Trustee’s legal counsel in connection with its review, preparation and delivery of this Indenture and related documentation.

 

The Issuer shall indemnify each of the Trustee, any predecessor Trustee and the Agents (which, for purposes of this paragraph, include such Trustee’s and Agents’ officers, directors, employees and agents) for, and hold them harmless against, any and all loss, damage, claim, proceedings, demands, costs, expense or liability including taxes (other than taxes based on the income of the Trustee) incurred by the Trustee or an Agent without negligence or willful misconduct on its part in connection with acceptance of administration of this trust and performance of any provisions under this Indenture, including the reasonable expenses and attorneys’ fees and expenses of defending itself against any claim of liability arising hereunder.  The Trustee and the Agents shall notify the Issuer promptly of any claim asserted against the Trustee or such Agent for which it may seek indemnity.  However, the failure by the Trustee or the Agent to so notify the Issuer shall not relieve the Issuer of its obligations hereunder.  Subject to Section 7.1(b), the Issuer need not reimburse or indemnify against any loss liability or expense incurred by the Trustee through its own willful misconduct or negligence.  The Issuer shall defend the claim and the Trustee or such Agent shall cooperate in the defense (and may employ its own counsel reasonably satisfactory to the Trustee) at the Issuer’s expense.  The Trustee or such Agent may have separate counsel and the Issuer shall pay the reasonable fees and expenses of

 

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such counsel.  The Issuer need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld.

 

To secure the Issuer’s payment obligations in this Section 7.7, the Trustee and the Agents shall have a senior Lien prior to the Notes against all money or property held or collected by the Trustee and the Agents, in its capacity as Trustee or Agent, except money or property held in trust to pay principal or premium, if any, and Additional Amounts, if any, or interest on particular Notes.

 

When the Trustee or an Agent incurs expenses or renders services after the occurrence of an Event of Default specified in clause (7) of Section 6.1, the expenses (including the reasonable fees and expenses of its agents and counsel) and the compensation for the services shall be preferred over the status of the Holders in a proceeding under any Bankruptcy Law and are intended to constitute expenses of administration under any Bankruptcy Law.  The Issuer’s obligations under this Section 7.7 and any claim or Lien arising hereunder shall survive the termination of this Indenture, the resignation or removal of any Trustee or Agent, the discharge of the Issuer’s obligations pursuant to Article VIII and any rejection or termination under any Bankruptcy Law.

 

Save as otherwise expressly provided in this Indenture, the Trustee shall have absolute and uncontrolled discretion as to the exercise of the discretion vested in the Trustee by this Indenture but, whenever the Trustee is bound to act under this Indenture at the request or direction of the Holders of Notes, the Trustee shall nevertheless not be so bound unless first indemnified to its satisfaction against all proceedings, claims and demands to which it may render itself liable and all costs, charges, expenses and liabilities which it may incur by so doing.

 

Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee, is subject to this Section 7.7.

 

The Company shall be jointly and severally liable with the Issuer for all of the Issuer’s obligations pursuant to this Section 7.7.

 

SECTION 7.8                 Replacement of Trustee .  The Trustee and any Agent may resign at any time by so notifying the Issuer in writing.  The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Issuer and the Trustee in writing and may appoint a successor trustee with the Issuer’s consent.  A resignation or removal of the Trustee or any Agent and appointment of a successor Trustee or Agent, as the case may be, shall become effective only upon the acceptance by the successor Trustee or the successor Agent, as the case may be, of appointment as provided in this section.  The Issuer may remove the Trustee if:

 

(1)           the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(2)           a receiver or other public officer takes charge of the Trustee or its property; or

 

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(3)           the Trustee becomes incapable of acting with respect to its duties hereunder.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall notify each Holder of such event and shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may, with the Issuer’s consent, appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.  If the Issuer does not reasonably promptly appoint a successor Trustee, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee.

 

A successor Trustee or successor Agent, as applicable, shall deliver a written acceptance of its appointment to the retiring Trustee or Agent, as applicable, and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee or Agent, as applicable, shall become effective, and the successor Trustee or Agent, as applicable, shall have all the rights, powers and duties of the Trustee or Agent, as applicable, under this Indenture.  Promptly after that, the retiring Trustee or Agent, as applicable, shall transfer, after payment of all sums then owing to the Trustee or Agent, as applicable, pursuant to Section 7.7, all property held by it as Trustee or Agent, as applicable, to the successor Trustee or Agent, as applicable, subject to the Lien provided in Section 7.7.  A successor Trustee or Agent, as applicable, shall mail notice of its succession to each Holder.

 

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Issuer’s obligations under Section 7.7 shall continue for the benefit of the retiring Trustee and the Issuer shall pay to any replaced or removed Trustee all amounts owed under Section 7.7 upon such replacement or removal.

 

SECTION 7.9                 Successor Trustee by Merger, Etc .  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee.  In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by consolidation, merger or conversion to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

 

SECTION 7.10              Eligibility; Disqualification .  There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power and that is subject to supervision or examination by federal or state authorities.

 

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The Trustee together with its affiliates shall at all times have a combined capital surplus of at least $50.0 million as set forth in its most recent annual report of condition.

 

This Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(l), (2) and (5).  The Trustee is subject to TIA § 310(b) including the provision in § 310(b)(1); provided that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities, or conflicts of interest or participation in other securities, of the Issuer or the Guarantors are outstanding if the requirements for exclusion set forth in TIA § 310(b)(1) are met.

 

SECTION 7.11              Preferential Collection of Claims Against the Company .  The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

 

ARTICLE VIII

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

SECTION 8.1                 Option To Effect Legal Defeasance or Covenant Defeasance .  The Issuer may, at the option of its Board of Directors evidenced by a Board Resolution, at any time, with respect to the Notes, elect to have either Section 8.2 or 8.3 be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.

 

SECTION 8.2                 Legal Defeasance and Discharge .  Upon the Issuer’s exercise under Section 8.1 of the option applicable to this Section 8.2, the Issuer shall be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, such Legal Defeasance means that the Issuer shall be deemed to have paid and discharged all the obligations relating to the outstanding Notes and the Notes shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.6, Section 8.8 and the other Sections of this Indenture referred to below in this Section 8.2, and to have satisfied all of their other obligations under such Notes and this Indenture and cured all then existing Events of Default (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder:  (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, interest and Additional Amounts, if any, on such Notes when such payments are due or on the Redemption Date solely out of the Defeasance Trust created pursuant to this Indenture; (b) the Issuer’s obligations with respect to Notes concerning issuing temporary Notes, or, where relevant, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s or Guarantors’ obligations in connection therewith; and (d) this Article VIII and the obligations set forth in Section 8.6 hereof.

 

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Subject to compliance with this Article VIII, the Issuer may exercise its option under Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 with respect to the Notes.

 

SECTION 8.3                 Covenant Defeasance .  Upon the Issuer’s exercise under Section 8.1 of the option applicable to this Section 8.3, the Issuer, the Company and the other Guarantors shall be released from any obligations under the covenants contained in Article IV, Section 5.1(4), Sections 6.1(3), (4) and (5), and Section 6.1 (7) (with respect to the Company and the Subsidiaries other than the Issuer), hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, such Covenant Defeasance means that, (i) with respect to the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and (ii) payment on the Notes may not be accelerated because of an Event of Default specified in Sections 6.1 (3), (4) or (5), or Section 6.1 (7) (with respect only to the Company and the Subsidiaries other than the Issuer).

 

SECTION 8.4                 Conditions to Legal or Covenant Defeasance .  In order to exercise either of the defeasance options under Section 8.2 or Section 8.3 hereof, the Issuer must comply with the following conditions:

 

(1)           the Issuer shall have irrevocably deposited in trust (the “Defeasance Trust”) with the Trustee for the benefit of the Holders Designated Government Obligations, for the payment of principal, premium, if any, interest on the Notes to redemption or maturity, as the case may be;

 

(2)           the Issuer shall have delivered to the Trustee an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred.  In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable U.S. federal income tax law;

 

(3)           the Issuer shall have delivered to the Trustee an Opinion of Counsel in the Federal Republic of Germany (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for income tax purposes of the Federal Republic of Germany as a result of such deposit and defeasance and will be subject to income tax in the Federal Republic of Germany on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

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(4)           the Issuer shall have delivered to the Trustee an Opinion of Counsel in Luxembourg (subject to customary exceptions and exclusions) to the effect that Holders of the Notes will not recognize income, gain or loss for income tax purposes of Luxem bourg as a result of such deposit and defeasance and will be subject to income tax in Luxembourg on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

(5)           no Default or Event of Default (other than to Incur Indebtedness used to defease the Notes under this Article) shall have occurred and be continuing on the date of such deposit in the Defeasance Trust or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;

 

(6)           such legal defeasance or covenant defeasance shall not result in a breach or violation of any other material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

 

(7)           the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over any other creditors of the Issuer or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuer or others; and

 

(8)           the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the legal defeasance or the covenant defeasance have been complied with.

 

SECTION 8.5                 Satisfaction and Discharge of Indenture .  This Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder when either (i) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation or (ii) (A) all such Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount of money sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued and unpaid interest and Additional Amounts, if any, to the date of maturity or redemption, (B) no Default (other than to Incur Indebtedness used to defease the Notes under this Article) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer, the Company or any of the other Guarantors is a party or by which it is bound, (C) the Issuer has paid, or caused to be paid, all sums payable by it under this Indenture, and (D) the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to give the notice of redemption and apply the deposited money toward the payment of such Notes at maturity or the Redemption Date, as the case may be.  In addition, the Issuer must

 

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deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

SECTION 8.6                 Survival of Certain Obligations .  Notwithstanding the satisfaction and discharge of this Indenture and of the Notes in the manner referred to in Section 8.1, 8.2, 8.3, 8.4 or 8.5, the respective obligations of the Issuer, the Company, the other Guarantors and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, 4.1 (with respect to the Trustee and, as far as the Issuer, the Company, and each of the other Guarantors is concerned, subject to Sections 8.2 and 8.5), 4.2, 4.6, 4.13 and 6.10, Article VII and Article VIII shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Issuer, the Company, the other Guarantors and the Trustee under Articles VII and VIII shall survive.  Nothing contained in this Article VIII shall abrogate any of the obligations or duties of the Trustee under this Indenture.

 

SECTION 8.7                 Acknowledgment of Discharge by Trustee .  Subject to Section 8.10, after (i) the conditions of Section 8.4 or 8.5 have been satisfied, (ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer and (iii) the Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon written request shall acknowledge in writing the discharge of all of the Issuer’s, the Company’s, and the other Guarantors’ obligations under this Indenture except for those surviving obligations specified in this Article VIII.

 

SECTION 8.8                 Application of Trust Moneys .  All cash deposited with the Trustee pursuant to Section 8.4 or 8.5 in respect of Notes shall be held in trust and applied by it, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such defeased or discharged Notes of all sums due and to become due thereon for principal, premium, if any, interest and Additional Amounts, if any, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash deposited pursuant to Section 8.4 or 8.5 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of outstanding Notes.

 

SECTION 8.9                 Repayment to the Issuer; Unclaimed Money .  The Trustee and any Paying Agent shall promptly pay or return to the Issuer upon Issuer Order any cash held by them at any time that are not required for the payment of the principal of, premium, if any, interest and Additional Amounts, if any, on the defeased or discharged Notes for which cash has been deposited pursuant to Section 8.4 or 8.5.

 

Any money held by the Trustee or any Paying Agent under this Article VIII, in trust for the payment of the principal of, premium, if any, interest and Additional Amounts, if any, on any Note and remaining unclaimed for two years after such principal, premium, if any, interest and Additional Amounts, if any, that has become due and payable shall be paid to the Issuer upon Issuer Order or if then held by the Issuer shall be discharged from such trust; and the

 

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Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer give notice to the Holders or cause to be published notice once, in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) or in the case of Definitive Notes, in addition to such publication, mail to Holders by first-class mail, postage prepaid, at their respective addresses as they appear on the registration books of the Registrar (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require, publish in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)), that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification, any unclaimed balance of such money then remaining will be repaid to the Issuer).

 

Claims against the Issuer for the payment of principal or interest and Additional Amounts, if any, on the Notes will become void unless presentment for payment is made (where so required in this Indenture) within, in the case of principal and Additional Amounts, if any, a period of ten years, or, in the case of interest, a period of five years, in each case from the applicable original payment date therefor.

 

SECTION 8.10              Reinstatement .  If the Trustee or Paying Agent is unable to apply any cash in accordance with Section 8.2, 8.3, 8.4 or 8.5 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and the Guarantors’ obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2, 8.3, 8.4 or 8.5 until such time as the Trustee or Paying Agent is permitted to apply all such cash in accordance with Section 8.2, 8.3, 8.4 or 8.5; provided , however , that if the Issuer has made any payment of interest on, premium, if any, principal and Additional Amounts, if any, of any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE IX

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

SECTION 9.1                 Without Consent of Holders of Notes .  Notwithstanding Section 9.2 hereof, the Issuer and the Trustee together may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note to:

 

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(1)           cure any ambiguity, omission, defect or inconsistency;

 

(2)           provide for the assumption by a successor entity of the obligations of the Issuer under and pursuant to this Indenture or of a Guarantor (other than the Company) under the Note Guarantees;

 

(3)           provide for uncertificated Notes in addition to or in place of certificated Notes ( provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(B) of the Code);

 

(4)           add Note Guarantees with respect to the Notes;

 

(5)           secure the Notes;

 

(6)           add to the covenants of the Issuer and the Guarantors for the benefit of the Holders or to surrender any right or power conferred upon the Issuer;

 

(7)           evidence and provide for the acceptance and appointment under this Indenture of any successor trustee;

 

(8)           comply with the rules of any applicable securities depositary;

 

(9)           issue Additional Notes in accordance with this Indenture; or

 

(10)         make any change that does not adversely affect the rights of any Holder of Notes under this Indenture.

 

SECTION 9.2                 With Consent of Holders of Notes .  The Issuer and the Trustee may amend or supplement this Indenture, the Notes or any amended or supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for the Notes), and, subject to Sections 6.7 and 6.10, any existing Default or Event of Default and its consequences or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for the Notes).  However, without the consent of each Holder of an outstanding Note adversely affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder of Notes):

 

(1)           reduce the percentage of principal amount of Notes whose Holders must consent to an amendment;

 

(2)           reduce the stated rate of or extend the stated time for payment of interest on any such Note;

 

(3)           reduce the principal of or extend the Stated Maturity of any such Note;

 

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(4)           reduce the premium payable upon the redemption of any such Note or change the time at which any such Note may be redeemed as described under Section 3.1;

 

(5)           reduce the premium payable upon the repurchase of any Note, change the time at which any Note may be repurchased, or change any of the associated definitions related to the provisions of Section 4.11 once the obligation to repurchase the Notes has arisen;

 

(6)           make any such Note payable in money other than that stated in such Note;

 

(7)           impair the right of any Holder to receive payment of premium, if any, principal of and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

 

(8)           make any change in the amendment provisions which require each Holder’s consent or in the waiver provisions; or

 

(9)           release the Company from its Note Guarantee (other than in accordance with the terms of this Indenture).

 

It shall not be necessary for the consent of the Holders of Notes under this Section 9.2 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

 

SECTION 9.3                 Notice of Amendment, Supplement or Waiver .  After an amendment, supplement or waiver under Section 9.1 or 9.2 hereto becomes effective, the Issuer shall mail to the Holders of Notes a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

 

SECTION 9.4                 Revocation and Effect of Consents .  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder of a Note.  An amendment or waiver becomes effective once the requisite number of consents is received by the Issuer or the Trustee.

 

The Issuer may, but shall not be obligated to, fix a record date for determining which Holders of the Notes must consent to such amendment, supplement or waiver.  If the Issuer fixes a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of Notes furnished to the Trustee prior to such solicitation pursuant to Section 2.5 or (ii) such other date as the Issuer shall designate.

 

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SECTION 9.5                 Notation on or Exchange of Notes .  The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

SECTION 9.6                 Trustee To Sign Amendments, Etc .  The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article IX; provided , however , that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which adversely affects the Trustee’s own rights, duties or immunities under this Indenture.  The Trustee shall be entitled to receive indemnity reasonably satisfactory to it, and shall be fully protected in relying upon, if delivered, an Opinion of Counsel and an Officers’ Certificate each stating that the execution of any such amendment, supplement or waiver is authorized or permitted by this Indenture and constitutes the legal, valid and binding obligations of the Issuer and the Guarantors enforceable in accordance with its terms.  Any Opinion of Counsel shall not be an expense of the Trustee.  With respect to any amendment, supplement or waiver under Section 9.2, the Trustee shall also be entitled to receive evidence satisfactory to it of the consent of the Holders.

 

ARTICLE X

 

NOTE GUARANTEE

 

SECTION 10.1              Note Guarantee .

 

(a)           Each Guarantor hereby jointly and severally, irrevocably and unconditionally Guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, call for redemption, purchase or otherwise, in accordance with the terms of such Note and of this Indenture.  In case of the failure of the Issuer punctually to make any such payment, each Guarantor hereby jointly and severally agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by acceleration, call for redemption, purchase or otherwise, and as if such payment were made by the Issuer.  The Note Guarantee extends to the Issuer’s repurchase obligations arising from a Change of Control pursuant to Section 4.11.

 

Each Guarantor hereby jointly and severally agrees that its obligations hereunder shall be irrevocable and unconditional, irrespective of the validity, regularity or enforceability of such Note or this Indenture, the absence of any action to enforce the same, any exchange, release or non-perfection of any Lien on any collateral for, or any release or amendment or waiver of any term of any other Guarantee of, or any consent to departure from any requirement of any other Guarantee of all or any of the Notes, the effects of Bankruptcy Law applicable in the event of bankruptcy proceedings being opened with respect to the Issuer, of all or any portion of the

 

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claims of the Trustee or any of the Holders for payment of any of the Notes, any waiver or consent by the Holder of such Note or by the Trustee with respect to any provisions thereof or of this Indenture, the obtaining of any judgment against the Issuer or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Issuer or any other Person or any collateral, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Note Guarantee.  Each Guarantor hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest (including Additional Amounts, if any) on such Note, whether at its Stated Maturity, by acceleration, call for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against each Guarantor to enforce the Note Guarantee without first proceeding against the Issuer.  Each Guarantor agrees that, to the extent permitted by applicable law, if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders is prevented by applicable law from exercising its respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, or the Trustee or the Holders are prevented from taking any action to realize on any collateral, such Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

 

No provision of the Note Guarantee or of this Indenture shall alter or impair the Note Guarantee of any Guarantor, which is absolute and unconditional, of the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on the Note upon which such Note Guarantee is endorsed.

 

Each Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation or reorganization or equivalent proceeding under applicable law, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, or the equivalent of any of the foregoing under applicable law, and shall, to the fullest extent permitted by applicable law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a voidable preference, fraudulent transfer, or as otherwise provided under similar laws affecting the rights of creditors generally or under applicable laws of the jurisdiction of formation of the Issuer, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

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The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

 

(b)           Each Note Guarantee (other than the Company’s Note Guarantee) will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Note Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally or under applicable law of the jurisdiction of incorporation of such Guarantor.

 

(c)           In the case of Fresenius Medical Care Deutschland GmbH (“FMCD”), the following provisions apply:

 

(i)            Without limiting the agreements set forth in Section 11.8, the Note Guarantee of FMCD will be limited if and to the extent payment under such Note Guarantee or the application of enforcement proceeds would cause (x) FMCD’s net assets ( Reinvermögen - calculated as the sum of the balance sheet positions shown under § 266(2)(A), (B) and (C) German Commercial Code ( Handelsgesetzbuch )) less the sum of the liabilities (shown under the balance sheet positions pursuant to § 266(3)(B), (C) and (D) German Commercial Code) to fall below FMCD’s registered share capital ( Stammkapital ) or (y) (if the amount of the net assets is already an amount less than the registered share capital) cause such amount to be further reduced and, in either case, thereby affecting the assets required for the obligatory preservation of its registered share capital according to section 30, 31 of the German Limited Liability Company Act ( GmbHG ) (such event a “Capital Impairment”).  For the purposes of calculating the Capital Impairment, the following adjustments will be made:  (x) the amount of any increase of the registered share capital out of retained earnings ( Kapitalerhöhung aus Gesellschaftsmitteln ) after the Closing Date that has been effected without the prior consent of the Trustee shall be deducted from the registered share capital; and (y) liabilities incurred in violation of the provisions of the Notes and this Indenture shall be disregarded. In the event FMCD’s net assets fall below its registered share capital, FMCD, upon request of the Trustee will realize in due course, to the extent legally permitted, any and all of its assets that are shown in the balance sheet with a book value ( Buchwert ) that is significantly lower than the market value of the assets if the relevant assets are not necessary for FMCD’s business ( nicht betriebsnotwendiges Vermögen ).

 

(ii)           If FMCD objects to the amount demanded by the Trustee under the Note Guarantee within twenty (20) business days after the Trustee has submitted to FMCD a payment demand FMCD shall appoint within five (5) business days a reputable international auditor to determine the exact amount. The auditor shall notify FMCD and the Trustee of the maximum amount payable under the Note Guarantee within forty (40) business days after its appointment. The costs of such auditor’s determination shall be borne by FMCD. The determination of the auditor shall be binding for FMCD, and the Holders (except for manifest error). To the extent that any payment has been made under the Note Guarantee by FMCD that would be necessary for FMCD to be able to cure any Capital Impairment or Liquidity Impairment such payment shall immediately — upon

 

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FMCD’s demand — be returned to FMCD by any person receiving such payment, provided, however, in no event shall the Trustee or Paying Agent have any responsibility or liability for the return of any amount distributed to any Holder or beneficial owner of the Notes by the Trustee or Paying Agent, including, without limitation, any obligation to seek return of such amounts from such Holder or beneficial owner.

 

(iii)                                If (x) FMCD does not object to the payment amount within the 20 business days period or (y) if FMCD does not appoint the auditor within the 5 business days period or (z) if the auditor fails to notify the amount payable within the 40 days period, then the Trustee shall be entitled to enforce the Note Guarantee without further delay. The burden of demonstration and proof ( Darlegungs- und Beweislast ) regarding the Capital Impairment and the maximum amount payable under the Note Guarantee shall remain with FMCD.

 

(iv)                               The maximum amount payable under the guarantee shall be limited to the extent and as long as FMCD as a consequence of the payment would become unable to pay its debts when due ( zahlungsunfähig ) within the meaning of section 64 GmbHG (such event a “Liquidity Impairment”). For the purpose of establishing whether a Liquidity Impairment would occur, payments made by FMCD after the Trustee has notified FMCD of its intention to enforce the Note Guarantee with respect to payment obligations that are not due at the time of the payment shall be disregarded, unless the Trustee has consented to such payments (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding). From the time the Trustee has notified FMCD and the Company of its intention to enforce the Note Guarantee, the Company may not make any payment demands against FMCD under shareholder loans and all such payment obligations of FMCD towards the Company shall be deferred, subordinated or waived as the Company sees fit, until the Trustee notifies FMCD that it is no longer enforcing the Note Guarantee or the Trustee consents (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding) to the payments to be made to the Company. Such notice may be delivered by the Trustee at any time and, if not previously delivered, will be delivered by the Trustee after the Notes have been repaid in full and all other obligations under this Indenture are satisfied.

 

The limitations in this Section 10.1(c) as to the Capital Impairment shall not apply to the extent FMCD has an adequate compensation claim ( vollwertiger Gegenleistungs- oder Rückgewähranspruch ) against the Company that compensates for any loss incurred due to any payment by FMCD under the Note Guarantee.

 

The limitations in this Section 10.1 (c) shall apply mutatis mutandis to the direct and indirect shareholders of FMCD (other than the Company) if and to the extent the enforcement of the Notes Guarantees constitutes a payment ( Auszahlung ) by the relevant shareholders of FMCD within the meaning of section 30 of the German Limited Liability Company Act ( GmbHB ).

 

SECTION 10.2                                            Execution and Delivery of Note Guarantees .  The Note Guarantees to be endorsed on the Notes shall be in the form attached hereto as Exhibit C .  Each Guarantor hereby agrees to execute its Note Guarantee, in the form attached hereto as Exhibit C , to be endorsed on each Note authenticated and delivered by the Trustee.

 

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The Note Guarantee shall be executed on behalf of the Company by two members of the Management Board of its General Partner and on behalf of any other Guarantor by such Person or Persons duly authorized by the Board of Directors or Management Board of such Guarantor.  The signature of any or all of these Persons on the Note Guarantee may be manual or facsimile.

 

A Note Guarantee bearing the manual or facsimile signature of individuals who were at any time the Responsible Officers of a Guarantor shall bind such Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Note on which such Note Guarantee is endorsed or did not hold such offices at the date of such Note Guarantee.

 

The delivery of any Note by the Trustee, after the authentication thereof in accordance with this Indenture, shall constitute due delivery of the Note Guarantee endorsed thereon on behalf of the Guarantors.  Each of the Guarantors hereby jointly and severally agrees that its Note Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding any failure to endorse a Note Guarantee on any Note.

 

SECTION 10.3                                            Guarantors May Consolidate, Etc., on Certain Terms .  Except as set forth in Section 10.4 and in Article V hereof, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company, the Issuer or another Guarantor or shall prevent any sale, transfer, assignment, lease, conveyance or other disposition of the property of a Guarantor as an entirety or substantially as an entirety to the Company, the Issuer or another Guarantor.

 

SECTION 10.4                                            Release of Guarantors .  (a) Subject to the limitations set forth in Sections 5.1 and 5.2 hereof, concurrently with any consolidation or merger of a Guarantor or any sale, transfer, assignment, lease, conveyance or other disposition of the property of a Guarantor as an entirety or substantially as an entirety, in each case as permitted by Sections 5.1, 5.2 and 10.3 hereof, and upon delivery by the Company or the Issuer to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such consolidation, merger, sale, transfer, assignment, conveyance or other disposition was made in accordance with Sections 5.1, 5.2 and 10.3 hereof, the Trustee shall execute any documents reasonably required in order to acknowledge the release of such Guarantor from its obligations under its Note Guarantee endorsed on the Notes and under this Indenture.  Any Guarantor not released from its obligations under its Note Guarantee endorsed on the Notes and under this Indenture shall remain liable for the full amount of principal of (premium, if any) and interest (including Additional Amounts, if any) on the Notes and for the other obligations of a Guarantor under its Note Guarantee endorsed on the Notes and under this Indenture.  Concurrently with the defeasance of the Notes under Section 8.2 or satisfaction and discharge of this Indenture under Section 8.5 hereof, the Guarantors shall be released from all of their obligations under their Note Guarantees endorsed on the Notes and under this Indenture, without any action on the part of the Trustee or any Holder of Notes.

 

(b)                                  Upon the sale or other disposition (including by way of merger or consolidation) of any Guarantor or the sale, conveyance, transfer, assignment, lease or other disposition of all or substantially all the assets of a Guarantor pursuant to Section 5.1 hereof, such Guarantor

 

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shall automatically be released from all obligations under its Note Guarantees endorsed on the Notes and under this Indenture in accordance with Sections 5.1 and 5.2.

 

(c)                                   At any time a Guarantor (other than the Company) is no longer an obligor under the Credit Facility, such Guarantor will be released and relieved from all of its obligations under its Note Guarantee.

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1                                            Notices .  Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier or first-class mail, postage prepaid, addressed as follows:

 

if to the Company or to FMCD, to it at:

 

Else-Kröner Strasse 1
61352 Bad Homburg
Germany
Facsimile:  011-49-6172-609-2280
Attention:  Michael Brosnan, Chief Financial Officer

 

if to the Issuer:

 

Fresenius Medical Care US Finance II, Inc.
920 Winter Street
Waltham MA 02451-1457
Facsimile:  781 699-9632
Attn:  Douglas G. Kott, Esq.

 

if to FMCH:

 

920 Winter Street
Waltham MA 02451-1457
Facsimile:  781 699-9632
Attn:  Douglas G. Kott, Esq.

 

in each case, with a copy to:

 

Fresenius Medical Care AG & Co. KGaA
Else-Kröner Strasse 1
61352 Bad Homburg
Germany
Facsimile:  011-49-6172-608-5534
Attention:  Dr. Peter Hennke

 

if to the Trustee:

 

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U.S. Bank National Association
225 Asylum Street, 23rd Floor
Hartford, CT 06103
Attention:  Melissa Dumont
Telecopier:  860-241-6897
Telephone:  860-241-6817

 

Each of the Issuer and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person.  Any notice or communication to the Issuer or the Trustee, shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if telecopied; and five (5) calendar days after mailing if sent by first class mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

 

Any notice or communication mailed to a Holder shall be mailed to such Person by first-class mail or other equivalent means at such Person’s address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed.

 

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

 

Notices regarding the Notes given to the Holders will be (a) sent to a leading newspaper having general circulation in New York (which is expected to be The Wall Street Journal (and, if and so long as Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require, published by the Issuer in a newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (b) in the event the Notes are in the form of Definitive Notes, sent by the Issuer, by first-class mail, with a copy to the Trustee, to each Holder of the Notes at such Holder’s address as it appears on the registration books of the registrar.  If and so long as such Notes are listed on any other securities exchange, notices will also be given by the Issuer in accordance with any applicable requirements of such securities exchange.  If and so long as any Notes are represented by one or more Global Notes and ownership of Book-Entry Interests therein are shown on the records of DTC or any successor appointed by DTC at the request of the Issuer, notices will be delivered to DTC or such successor for communication to the owners of such Book-Entry Interests.  Notices given by publication will be deemed given on the first date on which any of the required publications is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing.

 

SECTION 11.2                                            Certificate and Opinion as to Conditions Precedent .  Upon any request or application by the Issuer to the Trustee or an Agent to take any action under this Indenture, the Issuer and the Guarantors shall furnish to the Trustee at the request of the Trustee:

 

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(1)                                  an Officers’ Certificate, in form and substance reasonably acceptable to the Trustee (reasonableness to be determined objectively), stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied or complied with; and

 

(2)                                  an Opinion of Counsel in form and substance reasonably acceptable to the Trustee or such Agent (reasonableness to be determined objectively) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied or complied with.

 

In any case where several matters are required to be certified by, or covered by an Opinion of Counsel of, any specified Person, it is not necessary that all such matters be certified by, or covered by the Opinion of Counsel of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an Opinion of Counsel with respect to some matters and one or more such Persons as to other matters, and any such Person may certify or give an Opinion of Counsel as to such matters in one or several documents.

 

Any certificate of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such Responsible Officer knows, or in the exercise of reasonable care should know, that such Opinion of Counsel with respect to the matters upon which his certificate is based are erroneous.  Any Opinion of Counsel may be based, and may state that it is so based, insofar as it relates to factual matters, upon a certificate of, or representations by, a Responsible Officer or Responsible Officers of the Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

SECTION 11.3                                            Statements Required in Certificate or Opinion .  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(1)                                  a statement that the Person making such certificate or opinion has read such covenant or condition;

 

(2)                                  a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(3)                                  a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4)                                  a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with.

 

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SECTION 11.4                                            Rules by Trustee, Paying Agent, Registrar .  The Trustee, Paying Agent or Registrar may make reasonable rules for its functions.

 

SECTION 11.5                                            Legal Holidays .  If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period.

 

SECTION 11.6                                            Governing Law .  THIS INDENTURE AND THE NOTES, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE LIMITATIONS OF THE NOTE GUARANTEES EXPRESSED IN SECTIONS 10.1(c) HEREOF (AND THE EQUIVALENT PROVISION CONTAINED IN THE NOTE GUARANTEE ENDORSED ON THE NOTES) WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

SECTION 11.7                                            Submission to Jurisdiction .  To the fullest extent permitted by applicable law, each of the Issuer and the Guarantors irrevocably submits to the non-exclusive jurisdiction of any U.S. federal or state court in the Borough of Manhattan in the City of New York, County and State of New York, United States of America, in any suit or proceeding based on or arising under this Indenture or the Notes, and irrevocably agrees that all claims in respect of such suit or proceeding may be determined in any such court.  Each of the Issuer and the Guarantors, to the fullest extent permitted by applicable law, irrevocably and fully waives the defense of an inconvenient forum to the maintenance of such suit or proceeding and irrevocably waives to the fullest extent it may effectively do so any objection which it may now or hereafter have to the laying of venue of any such proceeding, and each of the Issuer and the Guarantors hereby irrevocably consents to be served with notice and service of process by delivery or by registered mail with return receipt requested addressed to FMCH’s registered agent, which as of the date hereof is CT Corporation System, 111 Eighth Avenue, New York, NY 10011 (which service of process by registered mail shall be effective with respect to the Issuer and the Guarantors so long as such return receipt is obtained, or in the event of a refusal to sign such receipt any Holder or the Trustee is able to produce evidence of attempted delivery by such means).  Each of the Issuer and the Guarantors further agrees that such service of process and written notice of such service to the Issuer and the Guarantors in the circumstances described above shall be deemed in every respect effective notice and service of process upon each of the Issuer and the Guarantors in any such action or proceeding.  Nothing herein shall affect the right of any Person to serve process in any other manner permitted by law.  Each of the Issuer and the Guarantors agrees that a final action in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other lawful manner.  Notwithstanding the foregoing, each of the Issuer and the Guarantors hereby agrees that any action arising out of or based on this Indenture or the Notes may also be instituted in any competent court in Germany, and it expressly accepts the jurisdiction of any such court in any such action.

 

Each of the Issuer and the Guarantors hereby irrevocably waives, to the extent permitted by law, any immunity to jurisdiction to which it may otherwise be entitled (including, without limitation, immunity to pre-judgment attachment, post-judgment attachment and execution)

 

75



 

 in any legal suit, action or proceeding against it arising out of or based on this Indenture or the Notes.

 

The provisions of this Section 11.7 are intended to be effective upon the execution of this Indenture without any further action by the Issuer and the Guarantors and the introduction of a true copy of this Indenture into evidence shall be conclusive and final evidence as to such matters.

 

SECTION 11.8                                            No Personal Liability of Directors, Officers, Employees and Stockholders .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, the general partner of Fresenius SE, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, this Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.

 

SECTION 11.9                                            Successors .  All agreements of the Issuer in this Indenture and the Notes and the Guarantors in this Indenture and the Note Guarantees shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

 

SECTION 11.10                                     Counterpart Originals .  All parties hereto may sign any number of copies of this Indenture.  Each signed copy or counterpart shall be an original, but all of them together shall represent one and the same agreement.

 

SECTION 11.11                                     Severability .  In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

 

SECTION 11.12                                     Table of Contents, Headings, Etc .  The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

 

SECTION 11.13                                     Trust Indenture Act Controls .  If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA § 318(c), the imposed duties shall control.

 

SECTION 11.14                                     Currency Indemnity .  The U.S. dollar (or any of its successor currencies) is the sole currency of account and payment for all sums payable by the Issuer under this Indenture.  Any amount received or recovered in a currency other than the U.S. dollar in respect

 

76



 

of the Notes (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Guarantor, any Subsidiary or otherwise) by the Holder in respect of any sum expressed to be due to it from the Issuer will constitute a discharge of the Issuer only to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not possible to make that purchase on that date, on the first date on which it is possible to do so).  If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient under any Note, the Issuer will indemnify the recipient against any loss sustained by it as a result.  In any event the Issuer will indemnify the recipient against the cost of making any such purchase.

 

For the purposes of this indemnity, it will be sufficient for the Holder to certify that it would have suffered a loss had an actual purchase of U.S. dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. dollars on such date had not been practicable, on the first date on which it would have been practicable).  These indemnities constitute a separate and independent obligation from the other obligations of the Issuer, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any holder and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any other judgment or order.

 

SECTION 11.15                                     Information .  For so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange, and the rules of such stock exchange so require, copies of this Indenture will be made available in Luxembourg through the offices of the Listing Agent in such city.

 

77



 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, as of the date first written above.

 

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

By:

/s/ Mark Fawcett

 

Name:

Mark Fawcett

 

Title:

Vice President and Treasurer

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE AG & CO. KGaA,

 

a partnership limited by shares, represented by

 

FRESENIUS MEDICAL CARE MANAGEMENT AG, its general partner

 

 

 

 

 

 

 

By:

/s/ Rice Powell

 

Name:

Rice Powell

 

Title

Member of the Management Board

 

 

 

 

By:

/s/ Michael Brosnan

 

Name

Michael Brosnan

 

Title:

Member of the Management Board

 

 

 

 

FRESENIUS MEDICAL CARE DEUTSCHLAND GmbH

 

 

 

 

 

 

By:

/s/ Marco Kiene

 

Name:

Marco Kiene

 

Title

Managing Director

 

 

 

 

By:

/s/ Dr. Olaf Schermeier

 

Name

Dr. Olaf Schermeier

 

Title

Managing Director

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE HOLDINGS, INC.

 

 

 

 

 

 

By:

/s/ Mark Fawcett

 

Name:

Mark Fawcett

 

Title:

Vice President and Treasurer

 

78



 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

 

 

 

By:

/s/Melissa A. Dumont

 

Name:

Melissa A. Dumont

 

Title:

Vice President

 

79


 

EXHIBIT A
TO THE INDENTURE

 

[FORM OF FACE OF GLOBAL NOTE]

 

[Global Note Legend]

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE TO THE DEPOSITORY TRUST COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

[Private Placement Legend]

 

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

 



 

SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

 

A-2



 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.75% Senior Note due 2024

 

CUSIP No.:

 

No.                     

$

 

FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”, which term includes any successor entity), for value received, promises to pay to Cede & Co. or its registered assigns upon surrender hereof the principal sum indicated on Schedule A hereof, on October 15, 2024.

 

Interest Payment Dates:  April 15 and October 15, commencing April 15, 2015

 

Record Dates:  April 1 and October 1 immediately preceding the Interest Payment Dates

 

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

 

A-3



 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

Trustee’s Certificate of Authentication

 

This is one of the Securities with the Guarantees endorsed thereon referred to in the within-mentioned Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

A-4



 

[FORM OF REVERSE]

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.75% Senior Note due 2024

 

1.                                       Interest .  FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below.  Interest on the Notes will accrue at 4.75% per annum on the principal amount then outstanding, and be payable semi-annually in cash in arrears on each April 15 and October 15, or if any such day is not a Business Day, on the next succeeding Business Day, commencing April 15, 2015, to the Holder hereof.  Notwithstanding any exchange of this Note for a Definitive Note during the period starting on a Record Date relating to such Definitive Note and ending on the immediately succeeding interest payment date, the interest due on such interest payment date shall be payable to the Person in whose name this Global Note is registered at the close of business on the Record Date for such interest.  Interest on the Notes will accrue from the most recent date to which interest has been paid.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

The Issuer shall pay interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) and on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth herein.

 

2.                                       Additional Amounts .  All payments made under or with respect to the Notes under the Indenture or pursuant to any Note Guarantee must be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of (1) the United States, Germany, Luxembourg, the United Kingdom or any political subdivision or governmental authority thereof or therein having the power to tax, (2) any jurisdiction from or through which payment on the Notes or any Note Guarantee is made, or any political subdivision or governmental authority thereof or therein having the power to tax or (3) any other jurisdiction in which the payor is organized or otherwise considered to be a resident or engaged in business for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each a “Relevant Taxing Jurisdiction”), collectively, “Taxes,” unless the Issuer, relevant Guarantor or other applicable withholding agent is required to withhold or deduct Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If the Issuer, any Guarantor or other applicable withholding agent is so required to withhold or deduct any amount for or on account of Taxes from any payment made under or with respect to the Notes or any Note Guarantee, the Issuer or such Guarantor, as the case may be, will be required to pay such amount — “Additional Amounts” — as may be necessary so that the net amount (including Additional Amounts) received by each beneficial owner after such withholding or deduction (including any withholding or deduction on such Additional Amounts) will not be less than the amount such beneficial owner would have received if such Taxes had not been withheld or deducted;

 

A-5



 

provided , however , that no Additional Amounts will be payable with respect to payments made to any beneficial owner to the extent such Taxes are imposed by reason of (i) such beneficial owner being considered to be or to have been connected with a Relevant Taxing Jurisdiction, otherwise than by the acquisition, ownership, holding or disposition of the Notes, the enforcement of rights under the Notes or under any Note Guarantee or the receipt of payments in respect of the Notes or any Note Guarantee, or (ii) such beneficial owner not completing any procedural formalities that it is legally eligible to complete and are necessary for the Issuer, a Guarantor or other applicable withholding agent to make or obtain authorization to make payments without such Taxes (including, without limitation, providing prior to the receipt of any payment on or in respect of a Note or any Note Guarantee, a complete, correct and executed IRS Form W-8 or W-9 or successor form, as applicable, with all appropriate attachments or a comparable form required by another Relevant Taxing Jurisdiction).  Further, no Additional Amounts shall be payable with respect to (i) any Tax on interest imposed by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner holding or owning, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Issuer or any Guarantor entitled to vote, (ii) any Tax on interest imposed by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a controlled foreign corporation that is a related person within the meaning of Section 864(d)(4) of the Code with respect to the Issuer or any Guarantor, (iii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business or (iv) any United States federal tax imposed pursuant to current sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Code”) or any amended or successor version that is substantively comparable and not materially more onerous to comply with (collectively, “FATCA”).  The Issuer or any Guarantor (as applicable) required to withhold any Taxes will make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority as and when required in accordance with applicable law.  The Issuer or any Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment by the Issuer or such Guarantor (as applicable) of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee.

 

No such Additional Amounts shall be payable with respect to the Notes under the Indenture or pursuant to any Note Guarantee where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the EU Savings Directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive.

 

Wherever in the Indenture or the Notes or any Note Guarantee there are mentioned, in any context, (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes under the Indenture or the Notes, (3) interest or (4) any other amount payable on or with respect to any of the Notes or any Note Guarantee, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

A-6



 

At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to herein or therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations in this Paragraph 2 will survive any termination, defeasance or discharge of the Indenture. References in this Paragraph 2 to the Issuer or any Guarantor shall apply to any successor(s) thereto.

 

3.                                       Method of Payment .  The Issuer shall pay interest on the Notes (except defaulted interest) to the Person in whose name this Note is registered at the close of business on the Record Date for such interest. The Issuer shall pay principal and interest in U.S. dollars.  Immediately available funds for the payment of the principal of (and premium, if any), interest and Additional Amounts, if any, on this Note due on any interest payment date, Maturity Date, Redemption Date or other repurchase date will be made available to the Paying Agent to permit the Paying Agent to pay such funds to the Holders on such respective dates.

 

4.                                       Paying Agent and Registrar .  Initially, U.S. Bank National Association will act as Paying Agent and as Registrar.  In the event that a Paying Agent or transfer agent is replaced, the Issuer will provide notice thereof (so long as the Notes are Global Notes) published in a leading newspaper having general circulation in New York City (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg

 

A-7



 

Stock Exchange and the rules of such stock exchange shall so require, published in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (in the case of Definitive Notes), in addition to such publication, mailed by first-class mail to each Holder’s registered address.  The Issuer may change any Registrar without notice to the Holders.  The Issuer, the Company or any of their Subsidiaries may, subject to certain exceptions, act in the capacity of Registrar or transfer agent.

 

5.                                       Indenture .  The Issuer issued the Notes under an Indenture, dated as of October 29, 2014 (the “Indenture”), among the Issuer, Fresenius Medical Care AG & Co. KGaA (the “Company”), Fresenius Medical Care Holdings, Inc. (“FMCH”), Fresenius Medical Care Deutschland GmbH (“FMCD” and together with the Company and FMCH, the “Guarantors”) and U.S. Bank National Association (the “Trustee”) as Trustee.  This Note is one of a duly authorized issue of Notes (as defined in the Indenture) of the Issuer designated as its 4.75% Senior Notes due 2024.  The terms of the Notes include those stated in the Indenture.  Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture for a statement of them.  The Notes are general obligations of the Issuer.  The Notes are not limited in aggregate principal amount and Additional Notes (as defined in the Indenture) may be issued from time to time under the Indenture, in each case subject to the terms of the Indenture; provided that the aggregate principal amount of Notes that will be issued on the Closing Date (as defined in the Indenture) will not exceed $400,000,000.  Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

 

6.                                       Ranking .  The Notes will be senior unsecured obligations of the Issuer and the Note Guarantees will be senior unsecured obligations of the Guarantors. The payment of the principal of, premium, if any, and interest on the Notes and the obligations of the Guarantors under the Note Guarantees will:

 

·                   rank pari passu in right of payment with all other Indebtedness of the Issuer and the Guarantors, as applicable, that is not by its terms expressly subordinated to other Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   rank senior in right of payment to all Indebtedness of the Issuer and the Guarantors, as applicable, that is, by its terms, expressly subordinated to the senior Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   be effectively subordinated to the Secured Indebtedness of the Issuer and the Guarantors, as applicable, to the extent of the value of the collateral securing such Indebtedness, and to the Indebtedness of the Subsidiaries that are not Guarantors of the Notes; and

 

·                   in the case of the Note Guarantee of Fresenius Medical Care Deutschland GmbH, be effectively subordinated to the claims of such Guarantor’s

 

A-8



 

third-party creditors as a result of limitations applicable to the Note Guarantee as set forth in Section 10.1(c) of the Indenture.

 

7.                                       Note Guarantee As provided in the Indenture and subject to certain limitations set forth therein, the obligations of the Issuer under the Indenture and this Note are Guaranteed on a senior unsecured basis pursuant to Note Guarantees endorsed hereon.  The Indenture provides that a Guarantor shall be released from its Note Guarantee upon compliance with certain conditions.

 

8.                                       Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at redemption prices equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)                                  as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)                                  100% of the principal amount of the Notes being redeemed.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2024 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to beneficial Holders whose Notes will be subject to redemption by the Issuer.

 

In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of $2,000 in original principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.

 

9.                                       Special Tax Redemption .  The Issuer is entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become

 

A-9



 

obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

(a)                                  a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

(b)                                  any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes (or, if the applicable Relevant Taxing Jurisdiction did not become a Relevant Taxing Jurisdiction until a later date, after such later date); provided that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

10.                                Notice of Redemption .  Notice of redemption will be given at least 30 days but not more than 60 days before the Redemption Date or Tax Redemption Date, as the case may be, (i) so long as the Notes are in global form, by publishing in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable and (ii) in the case of Definitive Notes, in addition to such publication, by mailing first-class mail to each Holder’s registered address.  Notes in denominations of $2,000 may be redeemed only in whole.  The Trustee may select for redemption portions (equal to $2,000 or any integral multiple of $1,000 in excess thereof) of the principal of Notes that have denominations larger than $2,000.

 

Except as set forth in the Indenture, from and after any Redemption Date or Tax Redemption Date, as the case may be, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date or Tax Redemption Date, as the case may be, then, unless the Issuer defaults in the payment of such Redemption Price, the Notes called for redemption will cease to bear interest and Additional Amounts, if any, and the only right of the Holders of such Notes will be to receive payment of the Redemption Price.

 

11.                                Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus

 

A-10


 

accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).  Holders of Notes that are subject to an offer to purchase will receive a Change of Control offer from the Company prior to any related Change of Control payment date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” appearing below.

 

12.                                Denominations; Form .  The Global Notes are in registered global form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

13.                                Persons Deemed Owners .  The registered Holder of this Note shall be treated as the owner of it for all purposes, subject to the terms of the Indenture.

 

14.                                Unclaimed Funds .  If funds for the payment of principal, interest, premium or Additional Amounts remain unclaimed for two years, the Trustee and the Paying Agents will repay the funds to the Issuer at its written request.  After that, all liability of the Trustee and such Paying Agents with respect to such funds shall cease.

 

15.                                Legal Defeasance and Covenant Defeasance .  The Issuer may be discharged from its obligations under the Indenture and the Notes except for certain provisions thereof (“Legal Defeasance”), and may be discharged from its obligations to comply with certain covenants contained in the Indenture (“Covenant Defeasance”), in each case upon satisfaction of certain conditions specified in the Indenture.

 

16.                                Amendment; Supplement; Waiver .  Subject to certain exceptions specified in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding.

 

17.                                Restrictive Covenants .  The Indenture imposes certain covenants that, among other things, limit the ability of the Issuer, the Company, the Guarantors and their Subsidiaries to incur additional Indebtedness, to incur additional Liens, to enter into Sale and Leaseback Transactions and enter into certain consolidations or mergers.  The limitations are subject to a number of important qualifications and exceptions.  The Issuer must annually report to the Trustee on compliance with such limitations.

 

18.                                Successors .  When a successor assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

 

19.                                Defaults and Remedies .  If an Event of Default (other than an Event of Default specified in clause (7) of Section 6.1 of the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture.  Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to enforce the Indenture or the Notes unless it has

 

A-11



 

received full indemnity.  The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal, premium, interest and Additional Amounts, if any, including an accelerated payment) if it determines that withholding notice is in their interest.

 

20.                                Trustee Dealings with Issuer .  The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

 

21.                                No Recourse Against Others .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, Fresenius SE’s general partner, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.  The waiver and release are part of the consideration for issuance of the Notes.

 

22.                                Authentication .  This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Note.

 

23.                                Abbreviations and Defined Terms .  Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).  Unless otherwise defined herein, terms defined in the Indenture are used herein as defined therein.

 

24.                                CUSIP Numbers .  The Issuer will cause the CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

 

25.                                Governing Law .  THIS NOTE AND THE INDENTURE, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT CERTAIN MATTERS CONCERNING LIMITATION THEREOF WILL BE

 

A-12



 

CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

A-13



 

SCHEDULE A

 

SCHEDULE OF PRINCIPAL AMOUNT

 

The initial principal amount at maturity of this Note shall be $[principal amount].  The following decreases/increases in the principal amount at maturity of this Note have been made:

 

Date of
Decrease/
Increase

 

Decrease in
Principal
Amount

 

Increase in
Principal
Amount

 

Total Principal
Amount
Following Such
Decrease/
Increase

 

Notation
Made by
or on
Behalf of
Trustee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-14



 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, check the box below:

 

o

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, state the amount:  $

 

Date:

 

 

 

 

 

Your Signature:

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

 

Participant in a recognized Signature Guarantee Medallion Program
(or other signature guarantor program reasonably acceptable to the Trustee)

 

A-15



 

EXHIBIT B
TO THE INDENTURE

 

[FORM OF FACE OF DEFINITIVE NOTE]

 

THIS NOTE IS A DEFINITIVE NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO.

 

[Private Placement Legend]

 

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

 

B-1



 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.75% Senior Note due 2024

 

 

CUSIP No.:

 

 

No.        

$

 

FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”, which term includes any successor entity), for value received, promises to pay to [                         ] or its registered assigns upon surrender hereof the principal sum of $                      , on October 15, 2024.

 

Interest Payment Dates:  April 15 and October 15, commencing April 15, 2015

 

Record Dates:  April 1 and October 1 immediately preceding the Interest Payment Dates

 

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

 

B-2



 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:

 

 

 

 

 

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Trustee’s Certificate of Authentication

 

This is one of the Securities with the Guarantees endorsed thereon referred to in the within-mentioned Indenture.

 

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

B-3



 

[FORM OF REVERSE]

 

FRESENIUS MEDICAL CARE US FINANCE II, INC.

 

4.75% Senior Note due 2024

 

1.                                       Interest .  FRESENIUS MEDICAL CARE US FINANCE II, INC., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below.  Interest on the Notes will accrue at 4.75% per annum on the principal amount then outstanding, and be payable semi-annually in cash in arrears on each April 15 and October 15, or if any such day is not a Business Day, on the next succeeding Business Day, commencing April 15, 2015, to the Holder hereof.  Notwithstanding any exchange of this Note for a Definitive Note during the period starting on a Record Date relating to such Definitive Note and ending on the immediately succeeding interest payment date, the interest due on such interest payment date shall be payable to the Person in whose name this Global Note is registered at the close of business on the Record Date for such interest.  Interest on the Notes will accrue from the most recent date to which interest has been paid.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

The Issuer shall pay interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) and on any Additional Amounts, from time to time on demand at the rate borne by the Notes.  Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth herein.

 

2.                                       Additional Amounts .  All payments made under or with respect to the Notes under the Indenture or pursuant to any Note Guarantee must be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of (1) the United States, Germany, Luxembourg, the United Kingdom or any political subdivision or governmental authority thereof or therein having the power to tax, (2) any jurisdiction from or through which payment on the Notes or any Note Guarantee is made, or any political subdivision or governmental authority thereof or therein having the power to tax or (3) any other jurisdiction in which the payor is organized or otherwise considered to be a resident or engaged in business for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each a “Relevant Taxing Jurisdiction”), collectively, “Taxes,” unless the Issuer, relevant Guarantor or other applicable withholding agent is required to withhold or deduct Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If the Issuer, any Guarantor or other applicable withholding agent is so required to withhold or deduct any amount for or on account of Taxes from any payment made under or with respect to the Notes or any Note Guarantee, the Issuer or such Guarantor, as the case may be, will be required to pay such amount — “Additional Amounts” — as may be necessary so that the net amount (including Additional Amounts) received by each beneficial owner after such withholding or deduction (including any withholding or deduction on such Additional Amounts) will not be less than the amount such beneficial owner would have received if such Taxes had not been withheld or deducted; provided , however , that no Additional Amounts will be payable with respect to payments made to any beneficial owner to the extent such Taxes are imposed by reason of (i) such beneficial

 

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owner being considered to be or to have been connected with a Relevant Taxing Jurisdiction, otherwise than by the acquisition, ownership, holding or disposition of the Notes, the enforcement of rights under the Notes or under any Note Guarantee or the receipt of payments in respect of the Notes or any Note Guarantee, or (ii) such beneficial owner not completing any procedural formalities that it is legally eligible to complete and are necessary for the Issuer, a Guarantor or other applicable withholding agent to make or obtain authorization to make payments without such Taxes (including, without limitation, providing prior to the receipt of any payment on or in respect of a Note or any Note Guarantee, a complete, correct and executed IRS Form W-8 or W-9 or successor form, as applicable, with all appropriate attachments or a comparable form required by another Relevant Taxing Jurisdiction).  Further, no Additional Amounts shall be payable with respect to (i) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner holding or owning, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Issuer or any Guarantor entitled to vote, (ii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a controlled foreign corporation that is a related person within the meaning of Section 864(d)(4) of the Code with respect to the Issuer or any Guarantor, (iii) any Tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any beneficial owner being a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business or (iv) any United States federal tax imposed pursuant to current sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Code”) or any amended or successor version that is substantively comparable and not materially more onerous to comply with (collectively, “FATCA”).  The Issuer or any Guarantor (as applicable) required to withhold any Taxes will make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority as and when required in accordance with applicable law.  The Issuer or any Guarantor (as applicable) will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment by the Issuer or such Guarantor (as applicable) of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee.

 

No such Additional Amounts shall be payable with respect to the Notes under the Indenture or pursuant to any Note Guarantee where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the EU Savings Directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive.

 

Wherever in the Indenture or the Notes or any Note Guarantee there are mentioned, in any context, (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes under the Indenture or the Notes, (3) interest or (4) any other amount payable on or with respect to any of the Notes or any Note Guarantee, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

At least 30 days prior to each date on which payment of principal, premium, if any, or interest or other amounts on the Notes is to be made (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be

 

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promptly thereafter), if the Issuer or a Guarantor will be obligated to pay Additional Amounts with respect to any such payment, the Issuer will promptly furnish the Trustee and the Paying Agent, if other than the Trustee, with an Officers’ Certificate stating that such Additional Amounts will be payable and the amounts so payable, and will set forth such other information necessary to enable the Trustee or the Paying Agent to pay such Additional Amounts to the Holders on the payment date.  The Issuer or a Guarantor (as applicable) will pay to the Trustee or the Paying Agent such Additional Amounts and, if paid to a Paying Agent other than the Trustee, shall promptly provide the Trustee with documentation evidencing the payment of such Additional Amounts.  Copies of such documentation shall be made available to the Holders upon request.

 

The Issuer will pay any present stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in any Relevant Taxing Jurisdiction from the execution, delivery and registration of Notes upon original issuance and initial resale of the Notes or any other document or instrument referred to therein or in connection with any payment with respect to, or enforcement of, the Notes or any Note Guarantee or any other document or instrument referred to herein or therein.  If at any time the Issuer changes its place of organization to outside of the United States or there is a new issuer organized outside of the United States, the Issuer or new issuer, as applicable, will pay any stamp, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any penalties, interest or other liabilities related thereto) which arise in the jurisdiction in which the Issuer or new issuer is organized (or any political subdivision thereof or therein) and are payable by the Holders of the Notes in respect of the Notes or any Note Guarantee or any other document or instrument referred to therein under any law, rule or regulation in effect at the time of such change or thereafter.

 

The foregoing obligations in this Paragraph 2 will survive any termination, defeasance or discharge of the Indenture. References in this Paragraph 2 to the Issuer or any Guarantor shall apply to any successor(s) thereto.

 

3.                                       Method of Payment .  The Issuer shall pay interest on the Notes (except defaulted interest) to the Person in whose name this Note is registered at the close of business on the Record Date for such interest.  Holders must surrender Notes to a Paying Agent to collect principal payments.  The Issuer shall pay principal and interest in U.S. dollars.  Immediately available funds for the payment of the principal of (and premium, if any), interest and Additional Amounts, if any, on this Note due on any interest payment date, Maturity Date, Redemption Date or other repurchase date will be made available to the Paying Agent to permit the Paying Agent to pay such funds to the Holders on such respective dates.

 

4.                                       Paying Agent and Registrar .  Initially, U.S. Bank National Association will act as Paying Agent and as Registrar.  In the event that a Paying Agent or transfer agent is replaced, the Issuer will provide notice thereof (so long as the Notes are Global Notes) published in a leading newspaper having general circulation in New York City (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, published in a newspaper having a general circulation in Luxembourg (which is expected to be the

 

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Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and (in the case of Definitive Notes), in addition to such publication, mailed by first-class mail to each Holder’s registered address.  The Issuer may change any Registrar without notice to the Holders.  The Issuer, the Company or any of their Subsidiaries may, subject to certain exceptions, act in the capacity of Registrar or transfer agent.

 

5.                                       Indenture .  The Issuer issued the Notes under an Indenture, dated as of October 29, 2014 (the “Indenture”), among the Issuer, Fresenius Medical Care AG & Co. KGaA (the “Company”), Fresenius Medical Care Holdings, Inc. (“FMCH”), Fresenius Medical Care Deutschland GmbH (“FMCD” and together with the Company and FMCH, the “Guarantors”) and U.S. Bank National Association (the “Trustee”) as Trustee.  This Note is one of a duly authorized issue of Notes (as defined in the Indenture) of the Issuer designated as its 4.75% Senior Notes due 2024.  The terms of the Notes include those stated in the Indenture.  Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture for a statement of them.  The Notes are general obligations of the Issuer.  The Notes are not limited in aggregate principal amount and Additional Notes (as defined in the Indenture) may be issued from time to time under the Indenture, in each case subject to the terms of the Indenture; provided that the aggregate principal amount of Notes that will be issued on the Closing Date (as defined in the Indenture) will not exceed $400,000,000.  Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

 

6.                                       Ranking .  The Notes will be senior unsecured obligations of the Issuer and the Note Guarantees will be senior unsecured obligations of the Guarantors. The payment of the principal of, premium, if any, and interest on the Notes and the obligations of the Guarantors under the Note Guarantees will:

 

·                   rank pari passu in right of payment with all other Indebtedness of the Issuer and the Guarantors, as applicable, that is not by its terms expressly subordinated to other Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   rank senior in right of payment to all Indebtedness of the Issuer and the Guarantors, as applicable, that is, by its terms, expressly subordinated to the senior Indebtedness of the Issuer and the Guarantors, as applicable;

 

·                   be effectively subordinated to the Secured Indebtedness of the Issuer and the Guarantors, as applicable, to the extent of the value of the collateral securing such Indebtedness, and to the Indebtedness of the Subsidiaries that are not Guarantors of the Notes; and

 

·                   in the case of the Note Guarantee of Fresenius Medical Care Deutschland GmbH, be effectively subordinated to the claims of such Guarantor’s third-party creditors as a result of limitations applicable to the Note Guarantee as set forth in Section 10.1(c) of the Indenture.

 

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7.                                       Note Guarantee As provided in the Indenture and subject to certain limitations set forth therein, the obligations of the Issuer under the Indenture and this Note are Guaranteed on a senior unsecured basis pursuant to Note Guarantees endorsed hereon.  The Indenture provides that a Guarantor shall be released from its Note Guarantee upon compliance with certain conditions.

 

8.                                       Optional Redemption .  The Issuer may redeem all or, from time to time, a part of the Notes, at its option, at redemption prices equal to 100% of the principal amount of the Notes being redeemed plus accrued interest, if any, to the redemption date, plus the excess of:

 

(a)                                  as determined by the calculation agent (which shall initially be the Trustee), the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed not including any portion of such payment of interest accrued on the date of redemption, from the redemption date to the maturity date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; over

 

(b)                                  100% of the principal amount of the Notes being redeemed.

 

In addition, the Notes may be redeemed, in whole or in part, by the Issuer on or after July 17, 2024 upon not less than 30 nor more than 60 days’ prior notice, at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

 

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date, and no additional interest will be payable to beneficial Holders whose Notes will be subject to redemption by the Issuer.

 

In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of $2,000 in original principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or in the case of Definitive Notes, issued in the name of the Holder thereof upon cancellation of the original Note.

 

9.                                       Special Tax Redemption .  The Issuer is entitled to redeem the Notes, at its option, in whole but not in part, upon not less than 30 nor more than 60 days’ notice, at 100% of the principal amount of the Notes, plus accrued and unpaid interest (if any) to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in the event the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any additional amounts as a result of:

 

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(a)                                  a change in or an amendment to the laws, treaties or regulations of any Relevant Taxing Jurisdiction; or

 

(b)                                  any change in or amendment to any official position regarding the application, administration or interpretation of such laws, treaties or regulations (including by virtue of a holding, judgment or order by a court of competent jurisdiction);

 

which change or amendment to such laws, treaties, regulations or official position is announced and becomes effective after the issuance of the Notes (or, if the applicable Relevant Taxing Jurisdiction did not become a Relevant Taxing Jurisdiction until a later date, after such later date); provided that the Issuer determines, in its reasonable judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it; provided , further , that at the time such notice is given, such obligation to pay Additional Amounts remains in effect.

 

Notice of any such redemption must be given within 270 days of the later of the announcement or effectiveness of any such change.

 

10.                                Notice of Redemption .  Notice of redemption will be given at least 30 days but not more than 60 days before the Redemption Date or Tax Redemption Date, as the case may be, (i) so long as the Notes are in global form, by publishing in a leading newspaper having a general circulation in New York (which is expected to be The Wall Street Journal ) (and, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the Luxemburger Wort or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange (www.bourse.lu)) and notify the Holders, the Trustee and the Luxembourg Stock Exchange, if applicable and (ii) in the case of Definitive Notes, in addition to such publication, by mailing first-class mail to each Holder’s registered address.  Notes in denominations of $2,000 may be redeemed only in whole.  The Trustee may select for redemption portions (equal to $2,000 or any integral multiple of $1,000 in excess thereof) of the principal of Notes that have denominations larger than $2,000.

 

Except as set forth in the Indenture, from and after any Redemption Date or Tax Redemption Date, as the case may be, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date or Tax Redemption Date, as the case may be, then, unless the Issuer defaults in the payment of such Redemption Price, the Notes called for redemption will cease to bear interest and Additional Amounts, if any, and the only right of the Holders of such Notes will be to receive payment of the Redemption Price.

 

11.                                Change of Control .  Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchase such Holder’s Notes, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).  Holders of Notes that are subject to an offer to purchase will receive a Change of Control offer

 

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from the Company prior to any related Change of Control payment date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” appearing below.

 

12.                                Denominations; Form .  The Global Notes are in registered global form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

13.                                Persons Deemed Owners .  The registered Holder of this Note shall be treated as the owner of it for all purposes, subject to the terms of the Indenture.

 

14.                                Unclaimed Funds .  If funds for the payment of principal, interest, premium or Additional Amounts remain unclaimed for two years, the Trustee and the Paying Agents will repay the funds to the Issuer at its written request.  After that, all liability of the Trustee and such Paying Agents with respect to such funds shall cease.

 

15.                                Legal Defeasance and Covenant Defeasance .  The Issuer may be discharged from its obligations under the Indenture and the Notes except for certain provisions thereof (“Legal Defeasance”), and may be discharged from its obligations to comply with certain covenants contained in the Indenture (“Covenant Defeasance”), in each case upon satisfaction of certain conditions specified in the Indenture.

 

16.                                Amendment; Supplement; Waiver .  Subject to certain exceptions specified in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding.

 

17.                                Restrictive Covenants .  The Indenture imposes certain covenants that, among other things, limit the ability of the Issuer, the Company, the Guarantors and their Subsidiaries to incur additional Indebtedness, to incur additional Liens, to enter into Sale and Leaseback Transactions and enter into certain consolidations or mergers.  The limitations are subject to a number of important qualifications and exceptions.  The Issuer must annually report to the Trustee on compliance with such limitations.

 

18.                                Successors .  When a successor assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

 

19.                                Defaults and Remedies .  If an Event of Default (other than an Event of Default specified in clause (7) of Section 6.1 of the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture.  Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to enforce the Indenture or the Notes unless it has received full indemnity.  The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of Notes

 

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notice of any continuing Default or Event of Default (except a Default in payment of principal, premium, interest and Additional Amounts, if any, including an accelerated payment) if it determines that withholding notice is in their interest.

 

20.                                Trustee Dealings with Issuer .  The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

 

21.                                No Recourse Against Others .  No member of the Board of Directors, director, officer, employee, incorporator or stockholder of the Issuer, Fresenius SE, Fresenius SE’s general partner, the Company, the Company’s General Partner or the Guarantors, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability and agrees not to enforce any claim in respect of the Notes, the Indenture or the Notes Guarantees to the extent that it would give rise to such personal liability.  The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.  Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.  In addition, such waiver and release may not be effective under the laws of the Federal Republic of Germany.  The waiver and release are part of the consideration for issuance of the Notes.

 

22.                                Authentication .  This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Note.

 

23.                                Abbreviations and Defined Terms .  Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).  Unless otherwise defined herein, terms defined in the Indenture are used herein as defined therein.

 

24.                                CUSIP Numbers .  The Issuer will cause the CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

 

25.                                Governing Law .  THIS NOTE AND THE INDENTURE, AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT CERTAIN MATTERS CONCERNING LIMITATION THEREOF WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

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ASSIGNMENT FORM

 

To assign this Note fill in the form below:

 

I or we assign and transfer this Note to

 

 

 

(Print or type assignee’s name, address and zip code)

 

 

 

 

 

(Insert assignee’s social security or tax I.D. No.)

 

 

 

and irrevocably appoint                          agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

 

Date:

 

 

Your Signature:

 

 

 

 

 

 

Sign exactly as your name appears on the other side of this Note.

 

 

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OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, check the box below:

 

o

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.11 of the Indenture, state the amount: $

 

Date:

 

 

 

 

Your Signature:

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

Participant in a recognized Signature Guarantee Medallion Program

(or other signature guarantor program reasonably acceptable to the Trustee)

 

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EXHIBIT C

TO THE INDENTURE

 

FORM OF NOTE GUARANTEE

 

For value received, each of the Guarantors hereby jointly and severally, irrevocably and unconditionally Guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, call for redemption, purchase or otherwise, in accordance with the terms of such Note and of the Indenture.

 

In case of the failure of the Issuer punctually to make any such payment, each of the Guarantors hereby jointly and severally agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by acceleration, call for redemption, purchase or otherwise, and as if such payment were made by the Issuer.  The Note Guarantee extends to the Issuer’s repurchase obligations arising from a Change of Control pursuant to the Indenture.

 

Each of the Guarantors hereby jointly and severally agrees that its obligations hereunder shall be irrevocable and unconditional, irrespective of the validity, regularity or enforceability of such Note or the Indenture, the absence of any action to enforce the same, any exchange, release or non-perfection of any Lien on any collateral for, or any release or amendment or waiver of any term of any other Guarantee of, or any consent to departure from any requirement of any other Guarantee of, all or any of the Notes, the effects of Bankruptcy Law applicable in the event of bankruptcy proceedings being opened with respect to the Issuer, of all or any portion of the claims of the Trustee or any of the Holders for payment of any of the Notes, any waiver or consent by the Holder of such Note or by the Trustee with respect to any provisions thereof or of the Indenture, the obtaining of any judgment against the Issuer or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each of the Guarantors hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Issuer or any other Person or any collateral, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Note Guarantee.  Each of the Guarantors hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest (including Additional Amounts, if any) on such Note, whether at its Stated Maturity, by acceleration, call for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in the Indenture, directly against each of the Guarantors to enforce this Note Guarantee without first

 

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proceeding against the Issuer.  Each Guarantor agrees that, to the extent permitted by applicable law, if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders is prevented by applicable law from exercising its respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, or the Trustee or the Holders are prevented from taking any action to realize on any collateral, such Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

 

No reference herein to the Indenture and no provision of this Note Guarantee or of the Indenture shall alter or impair the Note Guarantee of any Guarantor, which is absolute and unconditional, of the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Amounts, if any) on the Note upon which this Note Guarantee is endorsed.

 

This Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation or reorganization, or equivalent proceeding under applicable law, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, or the equivalent of any of the foregoing under applicable law, and shall, to the fullest extent permitted by applicable law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes whether as a voidable preference, fraudulent transfer, or as otherwise provided under similar laws affecting the rights of creditors generally or under applicable laws of the jurisdiction of formation of the Issuer, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by applicable law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under this Note Guarantee.   The Guarantors or any particular Guarantor shall be released from this Note Guarantee upon the terms and subject to certain conditions provided in the Indenture.

 

By delivery of a supplemental indenture to the Trustee in accordance with the terms of the Indenture or the execution of a Guarantee Agreement, each Person that becomes, or assumes the obligations of, a Guarantor after the date of the Indenture will be deemed to have executed and delivered this Note Guarantee for the benefit of the Holder of this Note with the same effect as if such Guarantor were named below.

 

All terms used in this Note Guarantee which are defined in the Indenture referred to in the Note upon which this Note Guarantee is endorsed shall have the meanings assigned to them in such Indenture.

 

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This Note Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Note Guarantee is endorsed shall have been executed by the Trustee under the Indenture by manual signature.

 

Each Note Guarantee (other than that of the Company) will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Note Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally or under applicable law of the jurisdiction of incorporation of such Guarantor.

 

In the case of Fresenius Medical Care Deutschland GmbH (“FMCD”), the following provisions apply:

 

(i)                                      Without limiting the agreements set forth in Section 11.8 of the Indenture, this Note Guarantee of FMCD will be limited if and to the extent payment under such Note Guarantee or the application of enforcement proceeds would cause (x) FMCD’s net assets ( Reinvermögen - calculated as the sum of the balance sheet positions shown under § 266(2)(A), (B) and (C) German Commercial Code ( Handelsgesetzbuch )) less the sum of the liabilities (shown under the balance sheet positions pursuant to § 266(3)(B), (C) and (D) German Commercial Code) to fall below FMCD’s registered share capital ( Stammkapital ) or (y) (if the amount of the net assets is already an amount less than the registered share capital) cause such amount to be further reduced and, in either case, thereby affecting the assets required for the obligatory preservation of its registered share capital according to section 30, 31 of the German Limited Liability Company Act ( GmbHG ) (such event a “Capital Impairment”).  For the purposes of calculating the Capital Impairment, the following adjustments will be made:  (x) the amount of any increase of the registered share capital out of retained earnings ( Kapitalerhöhung aus Gesellschaftsmitteln ) after the Closing Date that has been effected without the prior consent of the Trustee shall be deducted from the registered share capital; and (y) liabilities incurred in violation of the provisions of the Notes and this Indenture shall be disregarded. In the event FMCD’s net assets fall below its registered share capital, FMCD, upon request of the Trustee will realize in due course, to the extent legally permitted, any and all of its assets that are shown in the balance sheet with a book value ( Buchwert ) that is significantly lower than the market value of the assets if the relevant assets are not necessary for FMCD’s business ( nicht betriebsnotwendiges Vermögen ).

 

(ii)                                   If FMCD objects to the amount demanded by the Trustee under this Note Guarantee within twenty (20) business days after the Trustee has submitted to FMCD a payment demand FMCD shall appoint within five (5) business days a reputable international auditor to determine the exact amount. The auditor shall notify FMCD and the Trustee of the maximum amount payable under this Note Guarantee within forty (40) business days after its appointment. The costs of such auditor’s determination shall be borne by FMCD. The determination of the auditor shall be binding for FMCD, and the Holders (except for manifest error). To the extent that any payment has been made under this Note Guarantee by FMCD that would be necessary for FMCD to be able to cure any Capital Impairment or Liquidity Impairment such payment shall immediately — upon

 

C-3



 

FMCD’s demand — be returned to FMCD by any person receiving such payment, provided, however, in no event shall the Trustee or Paying Agent have any responsibility or liability for the return of any amount distributed to any Holder or beneficial owner of the Notes by the Trustee or Paying Agent, including, without limitation, any obligation to seek return of such amounts from such Holder or beneficial owner.

 

(iii)                                If (x) FMCD does not object to the payment amount within the 20 business days period or (y) if FMCD does not appoint the auditor within the 5 business days period or (z) if the auditor fails to notify the amount payable within the 40 days period, then the Trustee shall be entitled to enforce this Note Guarantee without further delay. The burden of demonstration and proof ( Darlegungs- und Beweislast ) regarding the Capital Impairment and the maximum amount payable under this Note Guarantee shall remain with FMCD.

 

(iv)                               The maximum amount payable under the guarantee shall be limited to the extent and as long as FMCD as a consequence of the payment would become unable to pay its debts when due ( zahlungsunfähig ) within the meaning of section 64 GmbHG (such event a “Liquidity Impairment”). For the purpose of establishing whether a Liquidity Impairment would occur, payments made by FMCD after the Trustee has notified FMCD of its intention to enforce this Note Guarantee with respect to payment obligations that are not due at the time of the payment shall be disregarded, unless the Trustee has consented to such payments (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding). From the time the Trustee has notified FMCD and the Company of its intention to enforce this Note Guarantee, the Company may not make any payment demands against FMCD under shareholder loans and all such payment obligations of FMCD towards the Company shall be deferred, subordinated or waived as the Company sees fit, until the Trustee notifies FMCD that it is no longer enforcing this Note Guarantee or the Trustee consents (at the direction of the Holders of at least a majority in principal amount of the Notes then outstanding) to the payments to be made to the Company. Such notice may be delivered by the Trustee at any time and, if not previously delivered, will be delivered by the Trustee after the Notes have been repaid in full and all other obligations under this Indenture are satisfied.

 

(v)                                  The limitations as to the Capital Impairment shall not apply to the extent FMCD has an adequate compensation claim ( vollwertiger Gegenleistungs- oder Rückgewähranspruch ) against the Company that compensates for any loss incurred due to any payment by FMCD under this Note Guarantee.

 

The limitations in the preceding paragraphs (i) through (v), inclusive, shall apply mutatis mutandis to the direct and indirect shareholders of FMCD (other than the Company) if and to the extent the enforcement of the Notes Guarantees constitutes a payment ( Auszahlung ) by the relevant shareholders of FMCD within the meaning of section 30 of the German Limited Liability Company Act ( GmbHG ).

 

The obligations of each Guarantor to the Holders of the Notes and to the Trustee pursuant to this Note Guarantee and the Indenture are expressly set forth in Article X of the Indenture

 

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and reference is made to Article X of the Indenture for further provisions with respect to this Note Guarantee.

 

THE NOTE GUARANTEES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE LIMITATIONS OF THE NOTE GUARANTEES EXPRESSED IN SECTION 10.1(c) OF THE INDENTURE (AND THE EQUIVALENT PROVISIONS IN THE ELEVENTH PARAGRAPH HEREOF) WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Note Guarantee to be duly executed.

 

 

FRESENIUS MEDICAL CARE AG & CO. KGaA, a partnership limited by shares and represented by FRESENIUS MEDICAL CARE MANAGEMENT AG, its general partner, as Guarantor

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE DEUTSCHLAND GMBH, as Guarantor

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

FRESENIUS MEDICAL CARE HOLDINGS, INC., as Guarantor

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

C-6



 

EXHIBIT D
TO THE INDENTURE

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Transfers pursuant to Section 2.7(a) of the Indenture)

 

Fresenius Medical Care US Finance II, Inc.
c/o U.S. Bank National Association
225 Asylum Street, 23rd Floor

Hartford, CT 06103

 

Attention:                                          Corporate Trust and Agency Services

Melissa Dumont

 

RE:                            4.75% Senior Notes due 2024
(the “Notes”) of Fresenius Medical Care US Finance II, Inc .

 

Reference is hereby made to the Indenture dated as of October 29, 2014 (the “Indenture”) among Fresenius Medical Care US Finance II, Inc., Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Holdings, Inc., Fresenius Medical Care Deutschland GmbH, and U.S. Bank National Association, as Trustee.  Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

 

This letter relates to $                   (being in a minimum amount of $2,000 and any integral multiple of $1,000 in excess thereof) principal amount of Notes beneficially held through interests in the Rule 144A Global Note (CUSIP No. 35802XAJ2) with DTC in the name of                 (the “Transferor”), account number                 .  The Transferor hereby requests that on [INSERT DATE] such beneficial interest in the Rule 144A Global Note be transferred or exchanged for an interest in the Regulation S Global Note (CUSIP No. U31434AE0) in the same principal denomination and transferred to                    (account no.                 ).  If this is a partial transfer, a minimum amount of $2,000 and any integral multiple of $1,000 in excess thereof of the Rule 144A Global Note will remain outstanding.

 

In connection with such request and in respect of such Notes, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and the Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S under the Securities Act, and accordingly the Transferor further certifies that:

 

(A)                                (1)                                  the offer of the Notes was not made to a Person in the United States;

 

(2)                                  either (a) at the time the buy order was originated, the transferee was outside the United States or we and any Person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed

 

D-1



 

in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any Person acting on our behalf knows that the transaction was prearranged with a buyer in the United States;

 

(3)                                  no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(a) of Regulation S, as applicable; and

 

(4)                                  the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

OR

 

(B)                                such transfer is being made in accordance with Rule 144 under the Securities Act.

 

D-2



 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.  Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act.

 

Dated:

 

 

 

 

 

 

 

 

 

 

[Name of Transferor]

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

Telephone No.:

 

 

 

 

 

Please print name and address (including zip code number)

 

 

 

 

 

 

D-3



 

EXHIBIT E
TO THE INDENTURE

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Transfers pursuant to Section 2.7(b) of the Indenture)

 

Fresenius Medical Care US Finance II, Inc.
c/o U.S. Bank National Association
225 Asylum Street, 23rd Floor

Hartford, CT 06103

 

Attention:                                          Corporate Trust and Agency Services

Melissa Dumont

 

RE:                            4.75% Senior Notes due 2024 (the “Notes”) of Fresenius Medical Care US Finance II, Inc .

 

Reference is hereby made to the Indenture dated as of October 29, 2014 (the “ Indenture ”) among Fresenius Medical Care US Finance II, Inc., Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Holdings, Inc., Fresenius Medical Care Deutschland GmbH, and U.S. Bank National Association, as Trustee.  Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

 

This letter relates to $                     (being in a minimum amount of $2,000 and in an integral multiple of $1,000 in excess thereof) principal amount of Notes beneficially held through interests in the Regulation S Global Note (CUSIP No. U31434AE0) with DTC in the name of                                (the “Transferor”), account number                   .  The Transferor hereby requests that on [INSERT DATE] such beneficial interest in the Regulation S Global Note be transferred or exchanged for an interest in the Rule 144A Global Note (CUSIP No. 35802XAJ2) in the same principal denomination and transferred to                              (account no.                 ).  If this is a partial transfer, a minimum of $2,000 and any integral multiple of $1,000 in excess thereof of the Regulation S Global Note will remain outstanding.

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with Rule 144A under the Securities Act to a transferee that the Transferor knows or reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

 

E-1



 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

Dated:

 

 

 

 

 

 

 

 

 

 

[Name of Transferor]

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

Telephone No.:

 

 

 

 

 

Please print name and address (including zip code number)

 

 

 

 

 

 

E-2




Exhibit 10.5

 

DRAFT DOCUMENT — THESE TERMS AND CONDITIONS

ARE IN DRAFT FORM AND ARE SUBJECT TO AMENDMENT AND COMPLETION

 

Terms and Conditions of the Equity-Neutral Convertible Bonds

(the “ Terms and Conditions ”)

 

§ 1        Definitions

 

In these Terms and Conditions the following terms will have the following meaning:

 

Adjusted Parity Value ” has the meaning set out in § 8(a)(iii)(B).

 

Adjustment Event ” has the meaning set out in § 9(b)(i).

 

Affiliate ” of any specified Person means

 

(i)          any other Person, directly or indirectly, controlling or controlled by; or

 

(ii)         under direct or indirect common control with such specified Person.

 

For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

Agents ” has the meaning set out in § 13(a).

 

AktG ” means the German Stock Corporation Act ( Aktiengesetz ) as amended from time to time.

 

Allotment ” has the meaning set out in § 9(b)(i)(E).

 

Averaging Date ” has the meaning set out in § 8(c)(i).

 

Bankruptcy Law ” means (i) for purposes of the Issuer or any of its Material Subsidiaries organized under the laws of the Federal Republic of Germany, any bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application (including, without limitation, the German Insolvency Code ( Insolvenzordnung ) and (ii) for purposes of any of the Issuer’s Subsidiaries organized outside of the Federal Republic of Germany, any bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application (including, without limitation, 11 U.S.C. §101 et seq., as amended).

 

BGB ” means the German Civil Code ( Bürgerliches Gesetzbuch ) as amended from time to time.

 

Bond Act ” means the German Act on Issues of Debt Securities ( Gesetz über Schuldverschreibungen aus Gesamtemissionen ) as amended from time to time.

 

Bond Market Price ” on a Trading Day means the market price per Principal Amount of the Bonds being the Bloomberg Generic Price (mid/last) per Principal Amount of the Bonds as derived from Bloomberg page [ · ] Corp HP as at the close of business on such Trading Day (or, if such Bloomberg page is not available, as derived from any substitute Bloomberg page or from any successor to Bloomberg or derived from any other public source providing substantially similar data to such Bloomberg page, or failing such source from such other source displaying trading prices in respect of the Bonds provided by leading institutions as shall be considered appropriate).

 

Bond Price Determination Date ” has the meaning set out in § 8(a)(iii)(B).

 

Bond Price Unavailability Period ” has the meaning set out in § 8(a)(iii)(B).

 

Bond(s) ” has the meaning set out in § 2(a).

 

1



 

Bondholder ” means the holder of a co-ownership interest or similar right in the Global Bond.

 

Business Day ” means a day (other than a Saturday or Sunday) (a) on which the Trans-European Automated Real-time Gross-settlement Express Transfer System 2 (TARGET) settles payments and (b) which is a Clearing System Business Day and (c) on which commercial banks and foreign exchange markets in Frankfurt am Main are open for business.

 

Calculation Agent ” has the meaning set out in § 13(a).

 

Calculation Period ” has the meaning set out in § 8(c)(i).

 

Call Redemption Date ” means the date fixed for redemption in the Issuer’s notice pursuant to § 5(b) which must be a Business Day.

 

Capital Increase Against Contributions with Subscription Rights ” has the meaning set out in § 9(b)(i)(C).

 

Capital Increase from Capital Reserves or Retained Earnings ” has the meaning set out in § 9(b)(i)(A).

 

Capital Market Indebtedness ” has the meaning set out in § 3(b).

 

Capital Stock ” has the meaning set out in § 5(c)(v).

 

Cash Amount ” has the meaning set out in § 8(c)(i).

 

Cash Dividend ” has the meaning set out in § 9(g).

 

Change in Law ” has the meaning set out in § 11.

 

Change in Share Classification ” has the meaning set out in § 9(b)(i)(B).

 

Change of Control ” has the meaning set out in § 5(c)(v).

 

Change of Control Triggering Event ” has the meaning set out in § 5(c)(v).

 

Clearing System Business Day ” means a day (other than a Saturday or Sunday) on which the Clearing System is open for business.

 

Clearing System ” means Clearstream Banking AG, Frankfurt am Main (“ Clearstream Frankfurt ”) including any successor.

 

Contingent Conversion Period ” has the meaning set out in § 8(a)(iii).

 

Control Record Date ” has the meaning set out in § 5(c)(i)(C).

 

Conversion Agents ” has the meaning set out in § 13(a).

 

Conversion Date ” means the Business Day on which the requirements for a valid exercise of the Conversion Right pursuant to § 8(b)(i), (ii) and (iii) are fulfilled. If such day falls after the Conversion Deadline, the Conversion Right will not have been validly exercised.

 

Conversion Deadline ” has the meaning set out in § 8(b)(i).

 

Conversion Exercise Date ” has the meaning set out in § 8(a)(i).

 

Conversion Notice ” has the meaning set out in § 8(b)(i).

 

Conversion Premium ” means 35 per cent.

 

2



 

Conversion Price ” per Share is initially equal to the Share Reference Price multiplied by the sum of 1 and the Conversion Premium (rounded to four decimal places with 0.00005 being rounded upwards). The Conversion Price will be adjusted from time to time in accordance with these Terms and Conditions.

 

Conversion Ratio ” on any day means the result (rounded to five decimal places with 0.000005 being rounded upwards) of the division of the Principal Amount by the prevailing Conversion Price on such day.

 

Conversion Right ” has the meaning set out in § 8(a).

 

Converted Bonds Payment Amount ” has the meaning set out in § 8(c).

 

Converted Bonds Principal Amount ” means the aggregate Principal Amount of Bonds delivered by a Bondholder in respect of a single Conversion Notice as determined by the Principal Conversion Agent pursuant to § 8(b)(iv).

 

Convertible Bonds Hedge Transaction ” has the meaning set out in § 8(c)(i).

 

Credit Facility ” has the meaning set out in § 3(d).

 

Custodian ” means any bank or other financial institution with which the Bondholder maintains a securities account in respect of any Bonds and having an account maintained with or is otherwise linked to the Clearing System and includes Clearstream Frankfurt.

 

Daily Cash Amount ” or “ DCA ” has the meaning set out in § 8(c)(i).

 

Delisting ” has the meaning set out in § 11.

 

Demerger ” has the meaning set out in § 9(b)(i)(F).

 

Day Count Fraction ” has the meaning set out in § 4(e).

 

Determination Date ” has the meaning set out in § 4(e).

 

Determination Period ” has the meaning set out in § 4(e).

 

Disrupted Day ” has the meaning set out in § 10.

 

Dividend Threshold ” has the meaning set out in § 9(g).

 

Early Redemption Amount ” per Bond means, the sum of the Principal Amount plus unpaid interest accrued to but excluding the Early Redemption Date and

 

(i)          in the case of the Hedge Counterparty’s Insolvency, the payment(s), if any, actually received by the Issuer or the Transferee Subsidiary, as applicable; or

 

(ii)         in all other cases, the payment(s), if any, to be received, by the Issuer or the Transferee Subsidiary, as applicable,

 

from the Hedge Counterparty in relation to the Convertible Bonds Hedge Transaction, following the termination of the Hedge Position under the Convertible Bonds Hedge Transaction corresponding to the Principal Amount per Bond to but excluding the fourth Business Day immediately preceding the Early Redemption Date. Provided, however, that:

 

(x)         if the Issuer or the Transferee Subsidiary, as applicable, has not exercised any corresponding termination right (other than due to the Hedge Counterparty’s Insolvency) under the Convertible Bonds Hedge Transaction (if any); or

 

(y)         if immediately prior to the Relevant Date, the Issuer or the Transferee Subsidiary, as applicable, does not hold a Hedge Position pursuant to the Convertible Bonds Hedge Transaction with respect to the

 

3



 

full aggregate Principal Amount of all Bonds redeemed because the Convertible Bonds Hedge Transaction has been terminated (other than due to the Hedge Counterparty’s Insolvency) prior to the Relevant Date,

 

the “ Early Redemption Amount ” will be the higher of (x) the Principal Amount per Bond plus unpaid interest accrued to but excluding the Early Redemption Date and (y) the Fair Value per Bond on the Relevant Date.

 

Where:

 

Fair Value ” means the fair market value per Bond on the Relevant Date as determined by an Independent Expert (appointed by the Issuer) using equitable discretion (§ 317 of the BGB) taking into account, inter alia, the Bond Market Price on the Relevant Date, the Share Price on the Relevant Date and any other market parameter the Independent Expert using equitable discretion (§ 317 of the BGB) deems to be relevant for the valuation of the Bond on the Relevant Date. For the avoidance of doubt, the Fair Value per Bond includes unpaid interest accrued to but excluding the Early Redemption Date.

 

Early Redemption Date ” means the 50 th  Business Day following the Relevant Date.

 

EUREX ” means EUREX Deutschland or any legal or functional successor thereof.

 

EUREX Corporate Actions Procedures ” has the meaning set out in § 9(g).

 

Ex Date ” means the first Trading Day on which the Shares are traded “ex dividend”.

 

Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended.

 

Exchange Disruption or Related Exchange Disruption ” has the meaning set out in § 10.

 

Failure to Open for Trading or Early Closure of the Exchange or Related Exchange ” has the meaning set out in § 10.

 

Financial Year ” means the financial year as set out in the Issuer’s articles of association.

 

Financing ” has the meaning set out in § 12(a)(iv).

 

Fitch ” has the meaning set out in § 5(c)(v).

 

FME ” means Fresenius Medical Care AG & Co. KGaA.

 

FME Group ” means FME and its Subsidiaries on a consolidated basis.

 

Fresenius SE ” means Fresenius SE & Co. KGaA, a partnership limited by shares ( Kommanditgesellschaft auf Aktien ).

 

FSE ” means the Frankfurt Stock Exchange or any legal or functional successor.

 

General Partner ” has the meaning set out in § 5(c)(v).

 

Global Bond ” has the meaning set out in § 2(b).

 

Hedge Counterparty ” has the meaning set out in § 8(c)(i).

 

Hedge Payout Amount ” has the meaning set out in § 8(c)(i).

 

Hedge Position ” has the meaning set out in § 8(c)(i).

 

Hedge Settlement Date ” has the meaning set out in § 8(c)(i).

 

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Independent Expert ” means an independent bank of international standing or an independent financial adviser with relevant expertise, which may be the initial Calculation Agent, appointed by the Issuer at its own expense.

 

Insolvency ” of any Person occurs if such Person

 

(i)          is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

(ii)         becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

(iii)        makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

(iv)        (A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in prong (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

 

(v)         has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

(vi)        seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;

 

(vii)      has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

 

(viii)      causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (vii) above (inclusive); or

 

(ix)       takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

 

Interest Calculation Period ” has the meaning set out in § 4(e).

 

Interest Commencement Date ” means 19 September 2014.

 

Interest Period ” means the period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and thereafter from and including each relevant Interest Payment Date to but excluding the next following Interest Payment Date.

 

Interest Payment Date ” means 31 January and 31 July in each year.

 

5



 

Intermediary ” means Société Générale or any other financial institution appointed from time to time by the Issuer to act as the Intermediary. No Intermediary will treat Bondholders as its clients for the purposes of the rules of the Financial Conduct Authority Limited. The Issuer shall be required to give notice to Bondholders of any change in the Intermediary.

 

Issue Date ” means 19 September 2014.

 

Issuer ” means Fresenius Medical Care AG & Co. KGaA.

 

Joint Representative ” has the meaning set out in § 17(g).

 

KGaA ” means a partnership limited by shares under German law ( Kommanditgesellschaft auf Aktien ).

 

Market Disruption Event ” has the meaning set out in § 10.

 

Maturity Date ” means 31 January 2020.

 

Material Subsidiary ” means any Subsidiary of FME falling under one of the following categories:

 

(i)          the Subsidiary Guarantors, provided that these Subsidiaries continue to satisfy the requirements of either (ii) or (iii) below;

 

(ii)         with EBITDA representing 5 per cent. or more of the consolidated EBITDA of the FME Group; or

 

(iii)        with total assets representing 5 per cent. or more of the total consolidated assets of FME,

 

in each case as determined by reference to the latest audited annual financial statements prepared in accordance with IFRS or US GAAP, as the case may be.

 

Merger Event ” has the meaning set out in § 9(a)(i).

 

Moody’s ” has the meaning set out in § 5(c)(v)

 

Nationalisation ” has the meaning set out in § 11.

 

New Issuer ” has the meaning set out in § 18(a).

 

Note Guarantee ” has the meaning set out in § 3(d).

 

Notification Day ” has the meaning set out in § 8(e)(ii).

 

Other Issue of Securities with Subscription Rights ” has the meaning set out in § 9(b)(i)(D).

 

Other Securities ” has the meaning set out in § 9(b)(i)(D).

 

Parity Event ” has the meaning set out in § 8(a)(iii)(B).

 

Parity Value ” has the meaning set out in § 8(a)(iii)(B).

 

Paying Agents ” has the meaning set out in § 13(a).

 

Permitted Holder ” has the meaning set out in § 5(c)(v).

 

Person ” has the meaning set out in § 5(c)(v).

 

Physical Settlement Date ” means the date for the delivery of any Shares by the Intermediary, which will be the fifth Business Day following the relevant Notification Day (in the case of § 8(d) and (e)) provided that if a Settlement Disruption Event occurs on such day, and delivery of any Shares cannot be effected on such day, then the Physical Settlement Date with respect to such Shares will be postponed until the first succeeding Business Day on which delivery of the Shares can take place through the Clearing System or in any other commercially reasonable manner, where “ Settlement Disruption Event ” means an event beyond

 

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the control of the Intermediary, as a result of which the Clearing System cannot settle the book-entry transfer of such Shares. If such Settlement Disruption Event continues to exist for a period of more than eight successive Business Days, the Intermediary, shall use any other customary delivery option (“ Delivery Alternative ”) on the eighth Business Day following the Business Day originally specified as applicable. If a Delivery Alternative is not available, the relevant settlement transaction affected shall be cancelled on the eighth Business Day following the Business Day originally specified as applicable either in whole or, if the relevant Clearing System can only clear a part of the transfer of the Shares to be delivered, in part, provided that the Calculation Agent shall determine the payable Cash Amount in respect of that part of the relevant transaction only which has not been fulfilled. The provisions of § 8(c) shall apply accordingly, provided that such eighth Business Day shall be the relevant Conversion Date.

 

Physical Settlement Notice ” has the meaning set out in § 8(e)(ii).

 

Physical Settlement Option ” has the meaning set out in § 8(e)(i).

 

Preferred Stock ” has the meaning set out in § 5(c)(v).

 

Principal Amount ” has the meaning set out in § 2(a).

 

Principal Conversion Agent ” has the meaning set out in § 13(a).

 

Principal Paying Agent ” has the meaning set out in § 13(a).

 

Qualified Majority ” has the meaning set out in § 17(b).

 

Rating Agency ” has the meaning set out in § 5(c)(v).

 

Rating Category ” has the meaning set out in § 5(c)(v).

 

Rating Date ” has the meaning set out in § 5(c)(v).

 

Ratings Decline ” has the meaning set out in § 5(c)(v).

 

Reference Period ” has the meaning set out in § 8(a)(iii)(B).

 

Relevant Adjustment Date ” has the meaning set out in § 9(g).

 

Relevant Conversion Ratio ” means, in respect of the relevant date, the result (rounded to five decimal places with 0.000005 being rounded upwards) of the division of the Converted Bonds Principal Amount by the Conversion Price prevailing on the relevant date.

 

Relevant Date ” means (i) in respect of an early redemption of the Bonds pursuant to § 5(d) the date of announcement of the fair value per option contract in relation to a termination of any option contract in respect of the Shares traded on EUREX, (ii) in respect of a Nationalisation, the date of the first public announcement of the relevant event, (iii) in respect of a Change in Law, the day on which the Issuer determines in good faith that a Change in Law has occurred, and (iv) in the case of a Delisting, the date on which the FSE makes the public announcement.

 

Relevant Record Date ” has the meaning set out in § 9(g).

 

Settlement Cycle ” has the meaning set out in § 9(g).

 

Settlement Date ” means the fifth Business Day following the last day of the Calculation Period, provided that if the Issuer is not yet in receipt of the full amounts in relation to the Convertible Bonds Hedge Transaction on such date, “ Settlement Date ” means the fourth Business Day following the Hedge Settlement Date.

 

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Share Price ” means the volume-weighted average price of the Share on XETRA on the relevant Trading Day appearing on or derived from the Bloomberg screen page FME GY <equity> AQR on the Bloomberg information system (or any future successor screen page or information system if such page is not available) at 17.45 hours Frankfurt time, subject to the occurrence of a Market Disruption Event and the provisions of § 10.

 

Share Reference Price ” means the simple arithmetic average of the daily Share Prices on each of the 15 Trading Days commencing on and including 17 September 2014, as determined by the Calculation Agent and notified by the Issuer to the Bondholders in accordance with § 14 (such notice specifying the Share Reference Price and the resulting Conversion Price).

 

Shares ” means the no par value ordinary bearer shares of FME, ISIN DE0005785802, and each a “ Share ”.

 

Subsidiary ” means, with respect to any Person, any corporation, limited liability company, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:

 

(i)          such Person;

 

(ii)         such Person and one or more Subsidiaries of such Person; or

 

(iii)        one or more other Subsidiaries of such Person.

 

Subsidiary Guarantees ” has the meaning set out in § 3(c).

 

Subsidiary Guarantors ” means each of Fresenius Medical Care Holdings Inc and Fresenius Medical Care Deutschland GmbH.

 

Substitute Rating Agency ” has the meaning set out in § 5(c)(v).

 

S&P ” has the meaning set out in § 5(c)(v).

 

Tender Offer ” has the meaning set out in § 9(a)(i).

 

Terms and Conditions ” means these terms and conditions of the Bonds.

 

Total Dividend ” has the meaning set out in § 9(g).

 

Trading Day ” means each day on which the XETRA system of the FSE and EUREX are scheduled to be open for trading in accordance with the schedules prepared and published for the XETRA system and EUREX, respectively.

 

Trading Disruption ” has the meaning set out in § 10.

 

Transferee Subsidiary ” means a Subsidiary to which the Issuer has transferred its Convertible Bonds Hedge Transaction in accordance with these Terms and Conditions.

 

UmwG ” means the German Transformation Act ( Umwandlungsgesetz ) as amended from time to time.

 

United States ” means the United States of America (including the States thereof and the District of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and Northern Mariana Islands).

 

Valuation Time ” has the meaning set out in § 10.

 

Voting Stock ” has the meaning set out in § 5(c)(v).

 

WpHG ” means the German Securities Trading Act ( Wertpapierhandelsgesetz ) as amended from time to time.

 

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WpÜG ” means the German Take Over Act ( Wertpapiererwerbs- und Übernahmegesetz ) as amended from time to time.

 

XETRA ” means the electronic trading system of Deutsche Börse AG including any successor.

 

§ 2        Form and Denomination

 

(a)         The issue by the Issuer of bonds in the aggregate principal amount of

 

€ [ · ]

 

(in words: euro [ · ])

 

is divided into bonds in bearer form with a principal amount of € 100,000 (the “ Principal Amount ”) each, which rank pari passu among themselves (the “ Bonds ” and each a “ Bond ”).

 

(b)         The Bonds are represented by a global bond in bearer form (the “ Global Bond ”) without interest coupons. The Global Bond will be signed manually by two authorised signatories of the Issuer and will be authenticated by or on behalf of the Principal Paying Agent.

 

Definitive Bonds and interest coupons will not be issued. The Bondholders will have no right to require the issue of definitive Bonds or interest coupons.

 

The Global Bond will be deposited with the Clearing System until the Issuer has satisfied and discharged all its obligations under the Bonds. Copies of the Global Bond are available for each Bondholder at the Principal Paying Agent.

 

(c)         The Bondholders will receive proportional co-ownership interests or comparable rights in the Global Bond, which are transferable in accordance with applicable law and the rules and regulations of the Clearing System.

 

(d)         Pursuant to the book-entry registration agreement between the Issuer and Clearstream Frankfurt, the Issuer has appointed Clearstream Frankfurt as its book-entry registrar in respect of the Bonds. Without prejudice to the issuance of the Bonds in bearer form and their status as bonds in bearer form the Issuer has agreed to maintain a register showing the aggregate principal amount of the Bonds represented by the Global Bond under the name of Clearstream Frankfurt, and Clearstream Frankfurt has agreed, as agent of the Issuer, to maintain records of the Bonds credited to the accounts of the accountholders of Clearstream Frankfurt for the benefit of the holders of the co-ownership interests in the Bonds represented by the Global Bond, and the Issuer and Clearstream Frankfurt have agreed, for the benefit of the holders of co-ownership interests in the Global Bond, that the actual number of Bonds from time to time shall be evidenced by the records of Clearstream Frankfurt.

 

§ 3        Status of the Bonds; Negative Pledge; Subsidiary Guarantees

 

(a)         Status of the Bonds

 

The Bonds constitute unsubordinated and unsecured obligations of the Issuer which rank pari passu among themselves. In the case of the insolvency or liquidation of the Issuer, the obligations of the Issuer under the Bonds rank at least pari passu with all other present and future unsubordinated and unsecured obligations of the Issuer, save for such obligations which may be preferred by applicable law.

 

(b)         Negative Pledge

 

So long as any Bond remains outstanding in whole or in part, but only up to the time all amounts payable in accordance with these Terms and Conditions have been placed at the disposal of the

 

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Clearing System and/or all conversion obligations pursuant to § 8 to 10 have been fulfilled, FME undertakes

 

(i)          not to provide any security in rem ( dingliche Sicherheit ) upon any of its assets for Capital Market Indebtedness (including any guarantees or other indemnities assumed in respect thereof); and

 

(ii)         to procure (to the extent legally possible and permissible) that no Material Subsidiary of FME will provide any security in rem ( dingliche Sicherheit ) upon any of its assets for Capital Market Indebtedness (including any guarantees or other indemnities assumed in respect thereof),

 

without at the same time having the Bondholders share equally and rateably in such security.

 

The undertaking pursuant to the foregoing sentence shall not apply to a security (i) which is mandatory according to applicable laws, or (ii) which is required as a prerequisite for governmental approvals, or (iii) which is provided by FME upon any claims of the Issuer against any company of the FME Group or any third party, which claims exist now or arise at any time in the future as a result of the passing on of the proceeds from the sale by FME of any Capital Market Indebtedness, provided that any such security serves to secure obligations under such Capital Market Indebtedness of FME, or (iv) which secures a Capital Market Indebtedness that becomes an obligation of FME or the FME Group as a consequence of a future acquisition, provided that such Capital Market Indebtedness was not created in contemplation of such future acquisition. Any security which is to be provided pursuant to this § 3(b) may also be provided to a person acting as trustee for the Bondholders.

 

Capital Markets Indebtedness ” means any present or future obligation for the payment or repayment of money that is borrowed through the issuance of bonds, debentures, notes or other similar debt securities which are, or are capable of being, admitted to trading on, or included in, a securities exchange, a regulated market or unregulated market or which are, or are capable of being, traded on an over-the-counter market, other than indebtedness resulting from an accounts receivable programme ( Forderungsverkaufsprogramm ) and/or any securitisation in relation thereto.

 

(c)         Subsidiary Guarantees

 

Each of the Subsidiary Guarantors has given towards the Principal Paying Agent for the benefit of the Bondholders the unconditional and irrevocable guarantee for the payment of principal together with all other sums payable by the Issuer under these Terms and Conditions pursuant to the guarantees, each dated on or around the Issue Date (the “ Subsidiary Guarantees ”).

 

(i)          Each Subsidiary Guarantee constitutes unsubordinated and unsecured obligations of the relevant Subsidiary Guarantor. In the case of the insolvency or liquidation of the relevant Subsidiary Guarantor, the obligations of the relevant Subsidiary Guarantor under the relevant Subsidiary Guarantee rank at least pari passu with all other present and future unsubordinated and unsecured obligations of the relevant Subsidiary Guarantor, save for such obligations which may be preferred by applicable law. Upon discharge of any payment obligation of a Subsidiary Guarantor subsisting under the Subsidiary Guarantee in favour of any Bondholder, the relevant guaranteed right of such Bondholder under these Terms and Conditions will cease to exist.

 

(ii)         Each Subsidiary Guarantee constitutes a contract in favour of the respective Bondholders as third party beneficiaries pursuant to § 328(1) of the BGB so that only the respective Bondholders will be entitled to claim performance of the Subsidiary Guarantee directly from

 

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each Subsidiary Guarantor and to enforce the Subsidiary Guarantee directly against each Subsidiary Guarantor.

 

(d)         Release of Subsidiary Guarantees

 

Pursuant to its terms, a Subsidiary Guarantee (but not any payment obligation under any Subsidiary Guarantee which has already become due and payable) will be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect)

 

(i)          upon discharge in full of the aggregate principal amount of all Bonds then outstanding and all other obligations under the Bonds then due and owing as provided in the Terms and Conditions; or

 

(ii)         at any time when a Subsidiary Guarantor is, for any reason, no longer an obligor under the Credit Facility, or is released from its obligations as guarantor under the Note Guarantee.

 

Credit Facility ” means the credit agreement entered into as of October 30, 2012 among, inter alios, Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Holdings, Inc., the other borrowers and guarantors identified therein, the lenders party thereto and Bank of America, N.A., as administrative agent, as amended, modified, renewed, refunded, replaced, restated or refinanced from time to time.

 

Note Guarantee ” means the guarantee by FME and the Subsidiary Guarantors of the obligations of Fresenius Medical Care US Finance II, Inc. (or a successor thereto) with respect to the 5.875% Senior Notes due 2022 of Fresenius Medical Care US Finance II, Inc. (or a successor thereto) or any additional 5.875% Senior Notes due 2022.

 

§ 4        Interest

 

(a)         The Bonds will bear interest on their Principal Amount at a rate of [ · ] per cent. per annum as from the Interest Commencement Date. Interest is payable semi-annually in arrear on each Interest Payment Date, commencing on 31 January 2015 (short first coupon). The amount of the first interest payment per Bond on 31 January 2015 will be € [ · ].

 

(b)         If a Bondholder exercises the Conversion Right in respect of any Bond, such Bond will cease to bear interest from the end of the day immediately preceding the Interest Payment Date immediately preceding the relevant Conversion Date; if the relevant Conversion Date falls before the first Interest Payment Date, the Bonds will not pay any interest.

 

(c)         If a Bond is redeemed, such Bond will cease to bear interest from the end of the day immediately preceding the due date for redemption.

 

(d)         If the Issuer fails to redeem the Bonds when due, interest will continue to accrue on the Principal Amount beyond the end of the day immediately preceding the due date for redemption until the end of the day immediately preceding the actual date of redemption of the Bonds. In this case the applicable rate of interest shall correspond to the default rate of interest established by German law.

 

(e)         Interest in respect of any period of time will be calculated on the basis of the Day Count Fraction.

 

Day Count Fraction ” means, in respect of the calculation of an amount of interest for any period of time (from and including the first day of such period to but excluding the last day of such period) (the “ Interest Calculation Period ”):

 

(i)          if the Interest Calculation Period is equal to or shorter than the Determination Period during which it falls, the number of days in the Interest Calculation Period divided by the product of

 

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(x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and

 

(ii)        if the Interest Calculation Period is longer than one Determination Period, the sum of:

 

(A)         the number of days in such Interest Calculation Period falling in the Determination Period in which the Interest Calculation Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and

 

(B)         the number of days in such Interest Calculation Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year.

 

Where:

 

Determination Period ” means each period from and including a Determination Date in any year to but excluding the next Determination Date.

 

Determination Date ” means each 31 January and 31 July.

 

§ 5        Maturity, Redemption and Purchase

 

(a)         Redemption at maturity . To the extent the Bonds have not previously been redeemed, converted, or repurchased and cancelled they will be redeemed at their Principal Amount on the Maturity Date plus accrued and unpaid interest, if any, to but excluding the Maturity Date.

 

(b)         Clean-up Call. The Issuer may, on giving not less than 70 nor more than 90 days’ prior notice to the Bondholders in accordance with § 14, redeem all but not some only of the outstanding Bonds with effect from the Call Redemption Date fixed in the notice if at any time the aggregate principal amount of the Bonds outstanding is equal to or less than 15 per cent. of the aggregate principal amount of the Bonds originally issued (including any additional Bonds issued in accordance with § 15). In the case such notice is given, the Issuer shall redeem the Bonds on the Call Redemption Date at their Principal Amount plus accrued and unpaid interest, if any, to but excluding the Call Redemption Date.

 

(c)         Repurchase at the Option of Bondholders upon a Change of Control Triggering Event

 

(i)          Each Bondholder, upon the occurrence of a Change of Control Triggering Event, will have the right to require that the Issuer repurchases such Bondholder’s Bonds not previously converted or redeemed, on the Control Record Date at a purchase price in cash equal to 101% of the Principal Amount plus accrued and unpaid interest, if any, to but excluding the Control Record Date.

 

Within 30 days following a Change of Control Triggering Event, the Issuer will publish a notice in accordance with § 14 stating:

 

(A)         that a Change of Control Triggering Event has occurred and that each Bondholder has the right to require the Issuer to repurchase such Bondholder’s Bonds not previously converted or redeemed, at a purchase price in cash equal to 101% of the Principal Amount plus accrued and unpaid interest, if any, to but excluding the Control Record Date;

 

(B)         the circumstances and relevant facts regarding such Change of Control Triggering Event;

 

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(C)                        the repurchase date (which shall be no earlier than 70 days nor later than 90 days from the date such notice is mailed) (the “ Control Record Date ”);

 

(D)                        that each Bond will be subject to repurchase only in integral multiples of the Principal Amount; and

 

(E)                         the instructions determined by the Issuer, consistent with this § 5(c), that a Bondholder must follow in order to have its Bonds purchased.

 

(ii)                         Any request by a Bondholder for a repurchase of Bonds pursuant to § 5(c)(i) is irrevocable and shall be made by means of a written declaration in the German or English language delivered to the specified office of the Principal Paying Agent together with proof that such Bondholder at the time of such notice is a holder of the relevant Bonds by means of a certificate of his Custodian or in any other appropriate manner. Such request together with the aforementioned proof must be received by the Principal Paying Agent by 4.00 p.m. (Frankfurt time) on the third Business Day prior to the Control Record Date. The respective Bondholder must deliver to the Principal Paying Agent the Bond(s) for which the right pursuant to § 5(c)(i) shall be exercised which must be received by the Principal Paying Agent by 4.00 p.m. (Frankfurt time) on the third Business Day prior to the Control Record Date.

 

(iii)                      If any Bond is required by a Bondholder to be purchased by the Issuer pursuant to § 5(c)(i), the Conversion Right in respect of such Bond may no longer be exercised by such Bondholder from the time of despatch by the Bondholder of its notice to the Principal Paying Agent pursuant to § 5(c)(ii).

 

(iv)       All Bonds so purchased, if any, by the Issuer may be cancelled or may be held or resold.

 

(v)        In this § 5(c):

 

Capital Stock ” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

 

Change of Control ” means the occurrence of one or more of the following events:

 

(A)                     so long as FME is organized as a KGaA, if the General Partner of FME charged with the management of FME shall at any time fail to be a Subsidiary of Fresenius SE, or if Fresenius SE shall fail at any time to own and control more than 25% of the capital stock with ordinary voting power in FME;

 

(B)                     if FME is no longer organized as a KGaA, any event the result of which is that (A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Fresenius SE, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such Person or group shall be deemed to have “beneficial ownership” of all shares that any such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the voting stock of FME and (B) the Permitted Holder do not “beneficially own” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a greater percentage of the total voting power of the Voting Stock of FME;

 

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(C)                     any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of FME to any person or group of related persons for purposes of Section 13(d) of the Exchange Act, together with any Affiliates thereof.

 

Change of Control Triggering Event ” means the occurrence of (i) a Change of Control and (ii) a Ratings Decline.

 

General Partner ” means Fresenius Medical Care Management AG, a German stock corporation, including its successors and assigns and other Persons, in each case who serve as the general partner ( persönlich haftender Gesellschafter ) of the Issuer from time to time.

 

Permitted Holder ” means Fresenius SE.

 

Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other entity.

 

Preferred Stock ”, as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

 

Rating Agency ” means Moody’s Investors Service, Inc. (“ Moody’s ”), Fitch Ratings Ltd. (“ Fitch ”) or Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies Inc. (“ S&P ”) or any of their respective affiliates or successors or any rating agency (a “ Substitute Rating Agency ”) substituted for any of them by the Issuer from time to time.

 

Rating Category ” means each category into which the rating chart is split by the relevant Rating Agency.

 

Rating Date ” means the date which is 90 days prior to the earlier of (1) the occurrence of the Change of Control and (2) the first public notice of the occurrence of a Change of Control or of the intention of FME or any person to effect a Change of Control.

 

Ratings Decline ” means the occurrence on or within 90 days after the date of the first public notice of either the occurrence of a Change of Control or of a transaction which will effect a Change of Control, whichever is earlier (which period shall be extended so long as any of the Rating Agencies have publicly announced that it is considering a possible downgrade of the Bonds) of: (1) in the event the Bonds are rated by each of (i) Moody’s, (ii) S&P and (iii) Fitch on the Rating Date as investment grade, a decrease in the rating of the Bonds by two of the three Rating Agencies to a rating that is below investment grade, or (2) in the event the Bonds are rated below investment grade by two of the three Rating Agencies on the Rating Date, a decrease in the rating of the Bonds by either such Rating Agency by one or more gradations (including gradations within Rating Categories as well as between Rating Categories).

 

Voting Stock ” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

(d)                        Early Redemption. If options contracts in respect of the Shares are traded on EUREX and any event occurs as a result of which such option contracts are terminated in accordance with the EUREX Corporate Actions Procedures, for example following the occurrence of a Merger Event or Tender

 

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Offer as described in § 9(b)(ii)(G), the Issuer shall, by providing notice of the occurrence of such event in accordance with § 14 within five Business Days of the Relevant Date, redeem all outstanding Bonds at their Early Redemption Amount on the Early Redemption Date. The Issuer shall inform the Bondholders of the Early Redemption Amount per Bond by publishing a notice in accordance with § 14 no later than on the Business Day immediately preceding the Early Redemption Date.

 

(e)         Upon the occurrence of a Nationalisation, a Delisting or a Change in Law, § 11(a) applies.

 

(f)                          The Issuer and any of its affiliates may at any time purchase Bonds, in the open market or otherwise. Any Bonds purchased by the Issuer or any of its affiliates may be cancelled or held and resold.

 

§ 6        Payments

 

(a)                        All payments on the Bonds will be made in euro to the Principal Paying Agent for transfer to the Clearing System or to its order for credit to the accounts of the relevant account holders of the Clearing System outside the United States. Payments on the Bonds made by the Issuer to the Clearing System or to its order shall discharge the liability of the Issuer under the Bonds to the extent of the sums so paid.

 

(b)                        If the due date for payment of any amount in respect of the Bonds is not a Business Day, then the Bondholder will not be entitled to payment until the next day which is a Business Day. In such case the Bondholders shall not be entitled to any interest or to any other compensation on account of such delay.

 

§ 7        Taxes

 

All payments with respect to the Bonds will be made without withholding or deduction for or on account of, any present or future taxes, duties, or governmental charges of any nature whatsoever imposed, levied or collected by way of deduction or withholding at source by, in or on behalf of the Federal Republic of Germany or by or on behalf of any political subdivision or authority thereof or therein having power to tax, unless the Issuer or the Intermediary, as the case may be, is required by applicable law to make any such payment with respect to the Bonds subject to any withholding or deduction for, or on account of, any present or future taxes, duties, or charges of whatever nature. In that case the Issuer or the Intermediary, as the case may be, shall effect such payment after such withholding or reduction has been made.

 

Neither the Issuer nor the Subsidiary Guarantors nor the Intermediary will be obliged to pay any additional amounts to the Bondholders as a result of such withholding or deduction.

 

§ 8        Conversion

 

(a)         Conversion Right

 

The Issuer grants to each Bondholder the right (the “ Conversion Right ”) to require the Bond(s) held by it to be purchased in accordance with the provisions of § 8(c):

 

(i)                            with effect as at any Conversion Exercise Date, where “ Conversion Exercise Date ” means (A) each 15 th  day of each month, or if such day is not a Business Day, the next day that is a Business Day, and (B) each last Business Day of each month. The first Conversion Exercise Date will be 15 November 2017, or if such day is not a Business Day, the next day that is a Business Day. The last Conversion Exercise Date will be 15 November 2019 or if such day is not a Business Day, the next day that is a Business Day;

 

(ii)                         with effect as at the eighth Business Day preceding the Call Redemption Date fixed in the notice of early redemption if the Issuer declares the Bonds due for early redemption pursuant to § 5(b);

 

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(iii)        on any Business Day during the Contingent Conversion Period, where “ Contingent Conversion Period ” means

 

(A)                        any of the following periods occurring after the Issue Date and prior to 15 November 2017:

 

(I)                            if FME makes a distribution to shareholders of cash, assets, securities or other property where the fair market value of such distribution per Share is greater than 20 per cent. of the arithmetic mean of the Share Prices on each Trading Day in the 20 Trading Day period ending on (and including) the Trading Day immediately preceding the date on which such distribution was first publicly announced by FME, the period from and including the date of first public announcement of such distribution to but excluding the Ex Date in respect of such distribution;

 

(II)                       if a Change of Control Triggering Event occurs, the period from and including the effective date of the notice of the Change of Control Triggering Event pursuant to § 5(c)(i)(A) to and including the fifth Business Day prior to the Control Record Date; and

 

(III)                  if any event of default set forth in § 12(a) occurs, the period from and including the date on which such event of default occurs to but excluding the date such Bondholder has terminated his Bonds in accordance with § 12; and

 

(B)                        any of the following periods with respect to a Parity Event occurring after the Issue Date and prior to 15 November 2017:

 

(I)                            if a Parity Event occurs, the period of ten consecutive Trading Days commencing on and including the first Trading Day following the last day of the relevant Reference Period; and

 

(II)                       if no market price per Principal Amount of the Bonds is available from the relevant Bloomberg page or such other source as described in the definition of the term “Bond Market Price” (a “ Bond Price Unavailability Period ”) for any Reference Period, then following the end of the Bond Price Unavailability Period the Calculation Agent shall determine the market price per Principal Amount of the Bonds as at the Bond Price Determination Date and if, as at the Bond Price Determination Date, the price per Principal Amount of the Bonds, as determined by the Calculation Agent, is less than the Adjusted Parity Value, the period of 30 Trading Days following the later of the Bond Price Determination Date and the date of the notice by the Issuer to the Bondholders pursuant to § 8(a)(iii)(D) below.

 

Where:

 

Adjusted Parity Value ” means 97 per cent. of the Parity Value in effect on each such Trading Day.

 

Bond Price Determination Date ” means the fifth Trading Day following the end of any Bond Price Unavailability Period.

 

A “ Parity Event ” occurs in relation to each Reference Period during which on each Trading Day of such Reference Period the Bond Market Price on such Trading Day is less than the Adjusted Parity Value in effect on each such Trading Day.

 

16



 

Parity Value ” means, in respect of any Trading Day, the product of the Share Price on such Trading Day and the Conversion Ratio on such Trading Day.

 

Reference Period ” means each period of 10 consecutive Trading Days.

 

(C)                        If a Bondholder exercises the Conversion Right in respect of any Bond in reliance on § 8(a)(iii)(B)(I), the Calculation Agent will determine and confirm whether a Parity Event has occurred. If the Calculation Agent determines that no Parity Event has occurred, the Conversion Right will not have been validly exercised.

 

(D)                        The Issuer shall as soon as reasonably practicable following any determination by the Calculation Agent as provided in § 8(a)(iii)(B)(II) give notice to Bondholders of such determination pursuant to § 14. Such notice shall specify the market price per Principal Amount of the Bonds, as determined by the Calculation Agent, as at the relevant Bond Price Determination Date and the Adjusted Parity Value as at the relevant Bond Price Determination Date.

 

The Conversion Right may not be exercised by a Bondholder, if (i) such Bondholder has required the Issuer to purchase his Bonds in accordance with § 5(c); or (ii) such Bondholder has terminated his Bonds in accordance with § 12; or (iii) the Issuer has terminated the Bonds in accordance with § 5(d) or § 11(a).

 

(b)         Exercise of the Conversion Right

 

(i)                         To exercise the Conversion Right, the Bondholder must deliver at his own expense during normal business hours to the Principal Conversion Agent via its Custodian and the Clearing System a duly completed and executed conversion notice (the “ Conversion Notice ”) (which may be by facsimile) using a form (from time to time current) obtainable from the Principal Conversion Agent which must be received by the Principal Conversion Agent by 16.00 hours Frankfurt time on the following date (the “ Conversion Deadline ”) as applicable:

 

(A)                        in the case of § 8(a)(i) the relevant Conversion Exercise Date. Any Conversion Notice received by the Principal Conversion Agent after 16.00 hours Frankfurt time on any such day will be deemed received by the Principal Conversion Agent one Business Day prior to the next following Conversion Exercise Date, provided that if any Conversion Notice is received by the Principal Conversion Agent after 16.00 hours Frankfurt time on the last Conversion Exercise Date the Conversion Right will not be validly exercised;

 

(B)                        in the case of § 8(a)(ii) the eighth Business Day preceding the Call Redemption Date fixed in the notice of early redemption, provided that if any Conversion Notice is received by the Principal Conversion Agent after 16.00 hours Frankfurt time on such day, the Conversion Right will not be validly exercised and there will be no subsequent Conversion Right to be exercised by a Bondholder;

 

(C)                        in the case of § 8(a)(iii) the last day of the relevant Contingent Conversion Period, provided that if any Conversion Notice is received by the Principal Conversion Agent after 16.00 hours Frankfurt time on the last day of the relevant Contingent Conversion Period, the Conversion Right will not be validly exercised.

 

(ii)                      The Conversion Notice is irrevocable and will, among other things:

 

(A)                      state the name and address (natural persons) or name, domicile and address (legal persons) of the exercising Bondholder;

 

17



 

(B)                        specify the number of Bonds with respect to which the Conversion Right will be exercised;

 

(C)                        designate the securities deposit account of the Bondholder or his nominee at a participant in, or account holder of, the Clearing System to which, in the case of § 8(e) and (f), the Shares are to be delivered;

 

(D)                        give directions to the Principal Conversion Agent for the payment of any amount of cash which the Bondholder is entitled to receive pursuant to these Terms and Conditions and which are to be paid by way of transfer to a euro account of the payee maintained with a bank in the European Union; and

 

(E)                         contain the certifications and undertakings set out in the form of the Conversion Notice relating to certain legal restrictions of the ownership of the Bonds and/or the Shares. If the Bondholder fails to deliver the above mentioned certifications and undertakings, the Issuer will not pay any amount of cash, or, in case of § 8(e) or (f), the Intermediary, will not deliver any Shares or pay any amount of cash, in respect of such a Conversion Notice.

 

(iii)                      The exercise of the Conversion Right further requires that the Bonds will be delivered to the Principal Conversion Agent prior to the relevant Conversion Deadline (A) by transferring the Bonds to the Clearing System account of the Principal Conversion Agent (book entry transfer or assignment) or (B) by irrevocable instruction to the Principal Conversion Agent to withdraw the Bonds from a deposit account with the Principal Conversion Agent (book entry transfer or assignment). The Principal Conversion Agent will hold the Bonds for the account of the Bondholders until all claims of such Bondholder thereunder have been satisfied.

 

(iv)                     Upon fulfilment of all requirements specified in § 8(b)(i), (ii) and (iii) for the exercise of the Conversion Right, the Principal Conversion Agent will verify whether the Converted Bonds Principal Amount actually delivered to the Principal Conversion Agent exceeds or falls short of the Converted Bonds Principal Amount specified in the Conversion Notice. In the event of any such excess or shortfall, the Principal Conversion Agent will determine the Relevant Conversion Ratio on the basis of the lower of (A) the Converted Bonds Principal Amount set forth in the Conversion Notice, or (B) the Converted Bonds Principal Amount in fact delivered. Any Bonds delivered in excess of the Converted Bonds Principal Amount specified in the Conversion Notice will be redelivered to the Bondholder at his cost. The Principal Conversion Agent will act in accordance with the regulations of the Clearing System.

 

(v)                        The Conversion Right will be deemed validly exercised on the relevant Conversion Date.

 

(c)         Purchase of the converted Bond(s) by the Issuer

 

(i)                            Upon the valid exercise of the Conversion Right by a Bondholder and subject to § 8(c)(ii) below, the Issuer will be required to purchase the relevant Bond(s) at the Converted Bonds Payment Amount on the relevant Settlement Date, unless the Issuer elects, and the Intermediary agrees to, the acquisition by the Intermediary of the relevant Bond(s) delivered by the relevant Bondholder pursuant to § 8(d) below, in which case the Bondholder will receive the Cash Amount or delivery of Shares as further set out in § 8(d), (e) and (f) below.

 

Averaging Date ” means, subject to an adjustment for Disrupted Days pursuant to § 10, each Trading Day within the Calculation Period; and

 

Calculation Period ” means the period of 40 consecutive Trading Days commencing on the fifth Trading Day immediately following the Conversion Date.

 

18



 

Cash Amount ” means in respect of a Calculation Period the sum (rounded to two decimal places with € 0.005 being rounded upwards) of the Daily Cash Amounts, where “ Daily Cash Amoun t” or “ DCA ” means an amount in euro calculated by the Calculation Agent in accordance with the following formula:

 

 

where:

 

N

=

40 (being the number of consecutive Trading Days in the Calculation Period);

 

 

 

P n

=

the Share Price on the n th  Averaging Date; and

 

 

 

RCR n

=

the Relevant Conversion Ratio prevailing on the nth Averaging Date.

 

No interest will be payable with respect to the Cash Amount.

 

Converted Bonds Payment Amount ” means the Cash Amount. However, if an Insolvency of the Hedge Counterparty has occurred prior to the Settlement Date, “ Converted Bonds Payment Amount ” means the sum of the Converted Bonds Principal Amount and the Hedge Payout Amount, subject to the following exception. If:

 

(x)                          the Convertible Bonds Hedge Transaction has not been terminated due to the Hedge Counterparty’s Insolvency and the Issuer or Transferee Subsidiary, as applicable, has not exercised the option under the Convertible Bonds Hedge Transaction in a corresponding part; or

 

(y)                          immediately prior to the Conversion Date the Issuer or a Transferee Subsidiary, as applicable, does not hold a Hedge Position pursuant to the Convertible Bonds Hedge Transaction with respect to the full aggregate Principal Amount of all Bonds to be purchased on conversion, because the Convertible Bonds Hedge Transaction has been terminated (other than due to the Hedge Counterparty’s Insolvency), prior to the Conversion Date,

 

the “ Converted Bonds Payment Amount ” will be the Cash Amount.

 

Convertible Bonds Hedge Transaction ” means a transaction or asset purchased by the Issuer from the Hedge Counterparty as counterparty under which the Issuer takes Hedge Positions with respect to all Bonds, as described more fully in the description of the Convertible Bonds Hedge Transaction attached to these Terms and Conditions as the Schedule . The Issuer may, in its sole discretion, transfer the Convertible Bonds Hedge Transaction to any of its Subsidiaries after the Issue Date. A copy of the pro forma documentation (where executed in the German language, translated into English) related to the Convertible Bonds Hedge Transaction excluding certain non-public or confidential information is available free of charge from the Issuer on the request of any Bondholder.

 

Hedge Counterparty ” means Société Générale.

 

Hedge Payout Amount ” means payment(s) actually received by the Issuer or a Transferee Subsidiary, as applicable, to and including the Hedge Settlement Date from the Hedge Counterparty in relation to the Convertible Bonds Hedge Transaction, as applicable either (i) following the exercise by the Issuer or a Transferee Subsidiary, as applicable, of, or (ii) otherwise under its Hedge Position pursuant to, the Convertible Bonds Hedge Transaction corresponding to the relevant Converted Bonds Principal Amount.

 

19



 

Hedge Position ” means a transaction or asset the Issuer deems appropriate in its sole discretion to hedge the equity price risk of entering into and performing its obligations with respect to a Bond or with respect to an option contract under which the Issuer or a Transferee Subsidiary, as applicable, hedges the equity price risk of the Issuer relating to a Bond. The Issuer does not make any representation express or implied to any Bondholder as to the suitability or adequacy of its Hedge Positions (or the Hedge Position transferred to any of its Subsidiaries, if applicable).

 

Hedge Settlement Date ” means the earlier of the date on which the full amounts in relation to any Convertible Bonds Hedge Transaction are actually received by the Issuer or a Transferee Subsidiary, as applicable, and the 15th Business Day following the last day of the Calculation Period.

 

The Conversion Notice will constitute the irrevocable acceptance by the relevant Bondholder of the Issuer’s offer to purchase the Bonds constituted by these Terms and Conditions. All Bonds so purchased, if any, by the Issuer may be cancelled or may be held or resold.

 

(ii)                         If following the valid exercise by a Bondholder of its Conversion Right and prior to the relevant Settlement Date an event occurs as a result of which the Bond(s) delivered for conversion would be terminated in accordance with § 5(d) had the Bondholder not exercised its Conversion Right, the Issuer shall pay as consideration for purchasing the Bonds the Early Redemption Amount on the Early Redemption Date instead of the Converted Bonds Payment Amount pursuant to § 8(c).

 

(d)                       Purchase of the converted Bond(s) by the Intermediary at the election of the Issuer on agreement with the Intermediary

 

Upon the valid exercise of the Conversion Right by a Bondholder requiring the Issuer to purchase the relevant Bond(s), the Issuer may, on agreement with the Intermediary (and without the requirement to make any notification to the relevant Bondholder in respect thereof), elect to procure the acquisition by the Intermediary of the relevant Bond(s) delivered by the relevant Bondholder in accordance with § 8(b)(iii) and (iv).

 

In the case of such acquisition the Intermediary will in its sole discretion purchase the relevant Bond(s)

 

(i)         at the Cash Amount calculated pursuant to the formula set forth in § 8(c); or

 

(ii)                       at such number of Shares calculated and delivered in accordance with § 8(e)(iii) if the Intermediary has exercised its Physical Settlement Option pursuant to § 8(e)(ii),

 

in respect thereof, and as consideration therefor.

 

Such payment and/or delivery of Shares shall, as against the relevant Bondholder, be made by the Intermediary in fulfilment of the obligation of the Issuer but for its own account ( Leistung für eigene Rechnung auf eine fremde Schuld ) and shall as such discharge and satisfy the Issuer’s obligations under § 8(a) to (c) towards the relevant Bondholder.

 

Bonds which are acquired by the Intermediary as provided above shall not be redeemed or cancelled and may be held or resold at any time by the Intermediary in its sole discretion and without any requirement to notify Bondholders, and such Bonds will continue to entitle the holder thereof to exercise the Conversion Right in the future.

 

20



 

Nothing in the foregoing shall affect or reduce the obligations of the Issuer in respect of the Bonds, and for the avoidance of doubt, no Bondholder shall by virtue of these Terms and Conditions have any rights against the Intermediary.

 

(e)         Physical Settlement Option

 

(i)                      Upon delivery of the relevant Bond(s) by the relevant Bondholder to the Principal Conversion Agent for purposes of the execution of the conversion, upon any exercise by the Issuer of its right to procure the acquisition by the Intermediary of the relevant Bond(s) delivered by the relevant Bondholder to the Principal Conversion Agent for purposes of the execution of the conversion, the Intermediary may elect, in its sole discretion, to satisfy the Bondholder’s claim for the payment of the Cash Amount in whole but not in part by physically delivering to the converting Bondholder such number of full Shares equal to the Relevant Conversion Ratio prevailing on the Conversion Date (the “ Physical Settlement Option ”), in which case the Intermediary will physically deliver to the converting Bondholder such number of full Shares in accordance with § 8(e)(iii).

 

(ii)                   To exercise the Physical Settlement Option, the Intermediary, will dispatch a notice to the relevant Bondholder that it will exercise the Physical Settlement Option (the “ Physical Settlement Notice ”) not later than on the Notification Day. The Intermediary, will dispatch the Physical Settlement Notice in writing, by fax, email or otherwise using the address stated in the Conversion Notice, if the Conversion Notice by the Bondholder that has been received by the Principal Conversion Agent includes the address of the Bondholder, or via the Principal Conversion Agent to the Clearing System for forwarding to the relevant Bondholder. “ Notification Day ” means the fourth Business Day after the relevant Conversion Date.

 

(iii)                Upon any exercise of the Physical Settlement Option, the Intermediary, will deliver such number of full Shares as is equal to the Relevant Conversion Ratio prevailing on the Conversion Date. Any remaining fraction of a Share shall not be delivered and shall not be compensated in cash. The Shares to be delivered will be transferred to the securities account of the relevant Bondholder specified in the Conversion Notice on the Physical Settlement Date. Upon delivery of the Shares to the securities account of the relevant Bondholder, such Bondholder’s payment claim in respect of the Cash Amount pursuant to § 8(a) and § 8(d) shall extinguish to the extent of such delivery (delivery instead of performance by payment ( Leistung an Erfüllungs statt )). Until transfer of the Shares has been made no claims arising from the Shares shall exist.

 

(f)          Procurement of Shares

 

(i)                      The Shares to be delivered by the Intermediary, upon exercise of the Conversion Right by a Bondholder and exercise by the Intermediary, of the right pursuant to § 8(c)(i)(A) in connection with § 8(e) or § 8(c)(i)(B) in connection with § 8(e), as the case may be, will be existing Shares with unrestricted dividend entitlement.

 

(ii)       The Intermediary, will procure delivery of the Shares through the Principal Conversion Agent.

 

§ 9         Adjustment of the Conversion Price

 

(a)         The Calculation Agent will adjust the Conversion Price as follows:

 

(i)                      If options contracts in respect of the Shares are traded on EUREX and EUREX adjusts such options contracts, in light of any corporate actions and/or capital adjustments, including for example, a Merger Event or a Tender Offer, the Calculation Agent shall, to the extent required and with effect as of the same date, adjust the Conversion Price and, conversely, the

 

21



 

Conversion Ratio of the Bonds to reflect the adjustments effected by EUREX, provided that (A) in relation to the distribution by FME to its shareholders of a Cash Dividend the Calculation Agent shall make the adjustments as set out in § 9(a)(ii) instead of the corresponding adjustments under the applicable EUREX Corporate Actions Procedures and (B) where a Merger Event or Tender Offer leads to changes in volatility or liquidity of the Share and EUREX does not make adjustments in respect of those changes in volatility or liquidity, the Calculation Agent shall adjust the Conversion Price to take into account the economic effects of such changes.

 

If no options contracts in respect of the Shares are traded on EUREX, the Calculation Agent shall make the necessary adjustments in light of any corporate actions and/or capital adjustments, other than in relation to the distribution by FME to its shareholders of a Cash Dividend, in analogous application of the relevant EUREX Corporate Actions Procedures.

 

Where:

 

Merger Event ” means that prior to the relevant Settlement Date:

 

(A)                        the merger of FME by way of absorption ( Aufnahme ), consolidation ( Neugründung ) or share exchange ( Aktientausch ), where FME is the transferring entity;

 

(B)                        the merger of FME by way of absorption ( Aufnahme ), consolidation ( Neugründung ) or share exchange ( Aktientausch ), where FME is the acquiring company and the number of Shares outstanding decreases by more than 50% as a result of the merger event;

 

(C)                        the making of a tender offer, exchange offer, takeover offer or other offer to acquire or irrevocably commit to acquire 100% of the Shares outstanding, provided that the acceptance of such offer results in all Shares being transferred or being irrevocably committed to be transferred to a third party; or

 

(D)                        a transfer of assets of FME, FME’s integration or restructuring or a change of legal form of FME, if such event results in all shares no longer existing ( endgültig untergehen ) or being transferredor being irrevocably committed to be transferred to a third party; and

 

Tender Offer ” means a tender offer, exchange offer, takeover offer or other offer made as a result of which the bidder will acquire upon acceptance of such offer more than 10% and less than 100% of the voting Shares outstanding, which occurs prior to the relevant Settlement Date, as determined by the Calculation Agent.

 

(ii)                   If FME distributes to its shareholders a Total Dividend in respect of a Financial Year that exceeds or falls below the Dividend Threshold, or if the Total Dividend is zero, the Calculation Agent shall apply the following adjustments instead of the corresponding adjustments under the applicable EUREX Corporate Actions Procedures:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price on the Relevant Record Date;

 

 

 

R

=

(S prev  – D) / (S prev  – T);

 

 

 

S prev

=

the official closing price of the Share on the Relevant Record Date;

 

22



 

D

=

the Total Dividend paid;

 

 

 

T

=

the Dividend Threshold in respect of the relevant Financial Year.

 

(b)                       As at the Issue Date, the EUREX Corporate Actions Procedures provide for adjustments of option contracts in respect of shares, including the Shares, that would be applied by the Calculation Agent when determining adjustments of the Conversion Price, if any, pursuant to § 9(a) of the Terms and Conditions as set out above. The EUREX Corporate Actions Procedures are subject to changes from time to time. Neither the Issuer nor the Calculation Agent is responsible for informing Bondholders of any change to the EUREX Corporate Actions Procedures. This § 9(b) and the below summary are for information purposes only and have been prepared in order to provide Bondholders with information of potential adjustments following the occurrence of the specified Adjustment Events. The information has been adjusted to fit with the terminology of the Bonds. However, EUREX may apply the EUREX Corporate Actions Procedures differently, in particular the definition and determination of the Adjustment Events below. In the case of any discrepancy between this description and the EUREX Corporate Actions Procedures, the EUREX Corporate Actions Procedures shall prevail.

 

(i)        Adjustment Events

 

For the purposes of this § 9(b) “ Adjustment Event ” means any of the following events:

 

(A)                        if, prior to the relevant Settlement Date, FME increases its share capital out of capital reserves or retained earnings by means of issuance of new Shares or increasing the nominal amount of existing Shares (a “ Capital Increase from Capital Reserves or Retained Earnings ”);

 

(B)         if, prior to the relevant Settlement Date, FME:

 

(I)                            increases the number of outstanding shares by reduction of the interest in the share capital represented by each share (share split) or reduces the number of outstanding shares by increasing the interest in the share capital represented by each share without reducing the share capital (reverse share split); or

 

(II)        reduces its share capital by combining its shares,

 

(a “ Change in Share Classification ”);

 

(C)                        if, prior to the relevant Settlement Date, FME increases its share capital through the issuance of new shares against cash contributions while granting its shareholders a direct or indirect subscription right (§§ 182, 186 AktG) (a “ Capital Increase Against Contributions with Subscription Rights ”);

 

(D)                        if, prior to the relevant Settlement Date, FME grants to its shareholders direct or indirect subscription rights in relation to (I) own shares, (II) securities with subscription or option or conversion rights in relation to shares of FME (but excluding the granting of subscription rights in the course of share capital increases pursuant to a Capital Increase Against Contributions with Subscription Rights or (III) other debt securities, participation rights or other securities of FME (the securities listed in (I) through (III) together, “ Other Securities ”) (an “ Other Issue of Securities with Subscription Rights ”);

 

(E)                         if, prior to the relevant Settlement Date, FME distributes, allots or grants to its shareholders (I) assets other than a Cash Dividend (whether in the form of a dividend in kind (including a dividend paid in Shares) or in the form of a capital decrease for the

 

23



 

purpose of repaying parts of the share capital (in which case the repayment will constitute assets for purposes of (I); or (II) debt securities or warrants or conversion rights (with the exclusion of the rights mentioned in relation to Other Issue of Securities); or (III) put options in the case of a share repurchase (an “ Allotment ”); and

 

(F)                       if a demerger ( Aufspaltung , § 123(1) UmwG) or a spin-off ( Abspaltung , § 123(2) UmwG) of FME occurs prior to the relevant Settlement Date (a “ Demerger ”).

 

(ii)       Consequences of Adjustment Events

 

Upon the occurrence of any Adjustment Event, the following adjustments are likely to occur in respect of certain terms of the Bonds, as derived from and subject to the EUREX Corporate Actions Procedures:

 

(A)        In the case of a Capital Increase from Capital Reserves or Retained Earnings:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

N o  / N n ;

 

 

 

Nn

=

the number of issued Shares of FME after the share capital increase; and

 

 

 

N o

=

the number of issued Shares of FME before the share capital increase.

 

(B)                        In the case of a Change in Share Classification, the adjustment as provided in subparagraph (A) will apply. Notwithstanding, that, if prior to the relevant Settlement Date FME decreases the share capital of FME by way of a reduction of the interest in the share capital represented by each share, the Conversion Price will remain unchanged. In this case, the Shares will be delivered with their respective new portion of the share capital allotted to them and, in the case of any cash settlement, the Cash Amount will be adjusted accordingly.

 

(C)         In the case of a Capital Increase Against Contributions with Subscription Rights:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

((N o  / N n ) x (1 – (E / S o ))) + (E / S o );

 

 

 

E

=

the issue price of the new Shares increased by the amount of any potential dividend disadvantage;

 

 

 

S o

=

old Share price;

 

 

 

N n

=

the number of issued shares of FME after the dilution event; and

 

 

 

N o

=

the number of issued Shares of FME before the dilution event.

 

24



 

(D)         In the case of an Other Issue of Securities with Subscription Rights:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

S ex  / S cum ;

 

 

 

S ex

=

S cum  – E;

 

 

 

Scum

=

official closing price of the cum entitlement Share of the relevant cash market (last day of the Share trading cum entitlement); and

 

 

 

E

=

the value of the Subscription Rights as determined by the Calculation Agent.

 

(E)         In the case of an Allotment:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

S ex  / S cum ;

 

 

 

S ex

=

S cum  – E;

 

 

 

S cum

=

official closing price of the cum entitlement Share of the relevant cash market (last day of the Share trading cum entitlement); and

 

 

 

E

=

the value of the Allotment as determined by the Calculation Agent.

 

(F)                          In the case of a Merger Event or Tender Offer where the offer consideration is shares or a combination of shares and cash where the share component is at least 33% of the total value:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

x / y; and

 

 

 

y

=

the number of shares offered for every x shares held in the underlying company, provided that where combined cash and share considerations are applicable, y shall be the actual number of shares offered plus the value of the amount of cash offered expressed as a number of shares.

 

(G)                        In the case of a Merger Event or Tender Offer where the offer consideration is cash or a combination of cash and shares where the share component is less than 33% of the total value, the Bonds (in line with any related options contract traded at EUREX) would be settled in cash in accordance with § 5(d) above.

 

25


 

(H)                       In the case of a Demerger EUREX applies the package method where the old share is replaced by a basket of two or more shares. When a Demerger becomes effective the sum of the basket components in theory matches the value of the old share. However, under certain circumstances the package method might not be the appropriate procedure to adjust options contracts. In such cases the following adjustment shall apply:

 

X n  = X o  x R

 

where:

 

X n

=

the adjusted Conversion Price;

 

 

 

X o

=

the Conversion Price prevailing prior to the adjustment;

 

 

 

R

=

(S cum  - value of the demerged company per share) / (S cum ); and

 

 

 

S cum

=

official closing price of the cum entitlement Share of the relevant cash market.

 

(I)                            An adjustment of the Conversion Price pursuant to a Capital Increase Against Contributions with Subscription Rights or an Issue of Other Securities will not take effect if FME grants each Bondholder the direct or indirect subscription rights to the number of new Shares or Other Securities, as the case may be, to which such Bondholder would have been entitled had the Bondholder exercised the Conversion Right immediately prior to the date of the adjustment.

 

(c)                         Adjustments in accordance with this § 9 will become effective as of (i) in the case of an adjustment stipulated by EUREX, on the same date as any corresponding adjustments made by EUREX; and (ii) in all other cases, the beginning of the Relevant Adjustment Date. Adjustments in accordance with this § 9 will not be made, if the effective date for such adjustments is later than, in the case of Bonds in respect of which the Conversion Right has been exercised, the date on which the Shares have been credited to the securities account specified by the relevant Bondholder or the relevant Cash Amount has been paid by the Paying Agent to the Clearing System or, in relation to Bonds not converted, the first day after the last Conversion Exercise Date pursuant to § 8(a)(i).

 

(d)                        Adjustments will be calculated by the Calculation Agent, subject to § 13(c). The Conversion Price determined in accordance with this § 9 will be rounded to four decimal places with € 0.00005 being rounded upwards.

 

(e)                         The Issuer will give notice in accordance with § 14 of an adjustment to the Conversion Price and/or any other adjustment to the terms of the Conversion Right made by the Calculation Agent pursuant to this § 9 without undue delay.

 

(f)                          In the event that any Share Price relevant for the calculation of a price or amount of cash is subsequently corrected by the exchange and the correction is published within less than one Settlement Cycle after the original publication, the Calculation Agent shall notify the Bondholders of the corrected Share Price, the amount of cash re-calculated taking into account this Share Price and any necessary further adjustment of the terms of the Bond.

 

(g)         In this § 9 the following terms shall have the following meaning:

 

Cash Dividend ” means the amount of any cash dividend (calculated on a per share basis) distributed by FME prior to deduction of any withholding tax.

 

The “ Dividend Threshold ” means, in relation to any Cash Dividend paid per Share in respect of a Financial Year, €0.77. Once an adjustment in relation to a Cash Dividend paid in respect of any

 

26



 

Financial Year has been made, the Dividend Threshold will be set at zero in relation to the remainder of that Financial Year.

 

If adjustments of the Conversion Price are required to be made pursuant to § 9 except pursuant to § 9(a)(ii), the Dividend Threshold shall be adjusted concurrently on a proportionate basis.

 

EUREX Corporate Actions Procedures ” means the manual published by EUREX Frankfurt AG addressing the capital adjustments to equity options at the EUREX exchange, as amended from time to time or any successor publication by EUREX Frankfurt AG.

 

Relevant Adjustment Date ” means, in case FME distributes to its shareholders a Cash Dividend, the Ex Date and, in case the annual shareholders’ meeting of FME does not resolve to pay any Cash Dividend in respect of a Financial Year, the first Trading Day following the date of the annual shareholders’ meeting.

 

Relevant Record Date ” means the Trading Day which immediately precedes the Relevant Adjustment Date.

 

Settlement Cycle ” means the period of Trading Days following a trade in the Shares on XETRA in which settlement will customarily occur according to the rules of XETRA.

 

Total Dividend ” means, calculated on a per share basis, the amount of any Cash Dividend paid in respect of a Financial Year, together with the aggregate amount of any other Cash Dividends per Share previously paid in respect of the same Financial Year (other than any amount of a Cash Dividend previously paid in respect of such Financial Year for which an adjustment of the Conversion Price was previously made under § 9(a)(ii)).

 

§ 10      Disrupted Days

 

If any Averaging Date is a Disrupted Day, then the Averaging Date shall be postponed to the first Trading Day on which the Market Disruption Event has ceased, irrespective of whether or not such date is already an Averaging Date. If a Market Disruption Event continues to exist for a period of more than eight successive Trading Days, the eighth Trading Day following the day originally specified as applicable shall be deemed to be the Averaging Date. On that eighth Trading Day the Calculation Agent shall determine the value of the Share at the Valuation Time.

 

Where the following definitions shall apply:

 

Disrupted Day ” means a day on which the Calculation Agent determines that a Market Disruption Event has occurred.

 

Exchange Disruption or Related Exchange Disruption ” means any event that disrupts or impairs the ability of market participants in general (i) to effect transactions in, or obtain market values for, the Share on XETRA, or (ii) to effect transactions in, or obtain market values for, futures or options contracts on EUREX relating to the Share at any time during the one hour period that ends at the relevant Valuation Time.

 

Failure to Open for Trading or Early Closure of the Exchange or Related Exchange ” means the failure to open for trading of XETRA or EUREX or the closure of XETRA or EUREX prior to its scheduled closing time unless such earlier closing time is announced by the relevant exchange(s) at least one hour earlier, in any case, however, one hour prior to the submission deadline for orders to be entered into the relevant exchange system for execution on the relevant Trading Day.

 

Market Disruption Event ” means each of (i) Trading Disruption, (ii) Exchange Disruption or Related Exchange Disruption and (iii) Failure to Open for Trading or Early Closure of the Exchange

 

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or Related Exchange but in respect of (i) and (ii) only if the Calculation Agent determines that such event is material.

 

Trading Disruption ” means any suspension of or limitation imposed on trading (i) relating to the Share on XETRA or (ii) in futures or options contracts relating to the Share on EUREX at any time during the one hour period that ends at the relevant Valuation Time.

 

Valuation Time ” means the close of trading in respect of the relevant day.

 

§ 11      Nationalisation, Delisting and Change in Law

 

(a)                        (i) If a Nationalisation and/or a Delisting occurs, the Issuer shall and (ii) if a Change in Law occurs the Issuer may, by providing notice of the occurrence of such event specifying the date of such termination in accordance with § 14 within five Business Days of the Relevant Date (or such lesser notice period as may be required to comply with the Change in Law) redeem all but not only some of the outstanding Bonds at their Early Redemption Amount on the Early Redemption Date. The Issuer shall inform the Bondholders of the Early Redemption Amount per Bond by publishing a notice in accordance with § 14 no later than on the Business Day immediately preceding the Early Redemption Date.

 

(b)         Where the following definitions shall apply:

 

Change in Law ” means that, on or after the Issue Date, (A) due to the adoption of or any change in any applicable law or regulation (including, without limitation, any tax law), or (B) due to the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law or regulation (including any action taken by a taxing authority), after the receipt by the Calculation Agent of notification by the Issuer, the Calculation Agent determines in good faith that it has become illegal for the Issuer, or for any party to a Change in Law Hedge Position, to hold, acquire or dispose of a Change in Law Hedge Position relating to the Bonds or the Convertible Bonds Hedge Transaction, provided that this provision shall not apply if the Calculation Agent determines that such party could have taken reasonable steps to avoid such illegality.

 

Change in Law Hedge Position ” means any purchase, sale, entry into or maintenance of one or more

 

(i)          positions or contracts in securities (including the Shares), options, futures, derivatives or foreign exchange;

 

(ii)         stock loan transactions; or

 

(iii)                     other instruments or arrangements (howsoever described) by a party in order to hedge, individually or on a portfolio basis, the equity price risk relating to the Bonds or the Convertible Bonds Hedge Transaction.

 

Delisting ” means that the Shares cease (or will cease) to be listed, traded or publicly quoted on XETRA pursuant to the rules of XETRA, and are not immediately re-listed, re-traded or re-quoted on another organised market or trading facility located in the same country as XETRA (or, where XETRA is within the European Union, in any member state of the European Union), as determined by the Calculation Agent.

 

Nationalisation ” means that all Shares or all or substantially all the assets of FME have been nationalised, expropriated or are otherwise required to be transferred to any authority, legal entity under public law ( juristische Person des öffentlichen Rechts ) or other governmental agency, as determined by the Calculation Agent.

 

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§ 12      Events of Default

 

(a)                           Each Bondholder will be entitled to declare all or some only of his Bonds due and demand immediate redemption of such Bonds at the Principal Amount as provided hereinafter plus accrued interest (if any) to but excluding the date of repayment, if:

 

(i)                      the Issuer fails to pay principal or interest in respect of the Bonds when due, whether at maturity, upon redemption or otherwise; or

 

(ii)       the Issuer fails to pay any other amount in respect of the Bonds within 30 days from the relevant due date; or

 

(iii)                the Issuer fails to observe or perform any other material obligation arising from the Bonds and such default, except where such default is incapable of remedy, continues unremedied for 60 or more days after the Issuer (through the Principal Paying Agent) has received notice thereof from a Bondholder; or

 

(iv)               FME or any of its Subsidiaries fails to perform one or several payment obligations under any present or future bond, note, loan or other indebtedness for money borrowed (each a “ Financing ”) including any guarantees or other indemnities assumed in respect of any Financing in an aggregate amount in excess of US$ 100 million, if such failure to perform results in the acceleration of such Financing prior to its express maturity or will constitute a default in the payment of such Financing; or

 

(v)                  any final judgment or judgments (not covered by insurance) which can no longer be appealed for the payment of money in excess of US$ 100 million shall be rendered against FME or any of its Subsidiaries and shall not be discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect; or

 

(vi)      FME or any of its Material Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:

 

(A)         suspends its payments or announces its inability to meet its financial obligations; or

 

(B)                        commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or makes a general assignment for the benefit of or a composition with its creditors or, for any of the reasons set out in §§ 17-19 of the German Insolvency Code ( Insolvenzordnung ), files for insolvency ( Antrag auf Eröffnung eines Insolvenzverfahrens ) or the board of directors ( Geschäftsführer ) is required by law to file for insolvency, a creditor files for the opening of insolvency proceedings and such filing is not frivolous and not dismissed within a period of one month by the competent insolvency court, or the competent court takes any of the actions set out in § 21 of the German Insolvency Code ( Insolvenzordnung ) or a competent court institutes insolvency proceedings ( Eröffnung des Insolvenzverfahrens ) or denies a petition for commencement of insolvency proceeding by reason of insufficient assets; or

 

(C)         commences a voluntary case; or

 

(D)         consents to the entry of an order for relief against it in an involuntary case; or

 

(E)                         consents to the appointment of a custodian of it or for all or substantially all of its property; or

 

(F)          makes a general assignment for the benefit of its creditors; or

 

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(G)         takes any corporate action to authorize or effect any of the foregoing.

 

(viii)                 the Issuer is wound up, unless this is effected in connection with a merger or another form of amalgamation with another company or in connection with a restructuring, and the other or the new company assumes all obligations of the Issuer arising under the Bonds; or

 

(ix)               any law, governmental order, decree or enactment will gain recognition in the Federal Republic of Germany whereby the Issuer is legally prevented from performing its obligations under the Bonds and this situation is not cured within 90 days; or

 

(x)                  any Subsidiary Guarantee shall cease to be in full force and effect in accordance with its terms for any reason except pursuant to the terms of the relevant Subsidiary Guarantee governing the release of the Subsidiary Guarantee or the satisfaction in full of all the obligations thereunder or shall be declared invalid or unenforceable other than as contemplated by its terms, or any Subsidiary Guarantor shall repudiate, deny or disaffirm any of its obligations thereunder or under the terms of the relevant Subsidiary Guarantee.

 

The right to declare Bonds due will terminate if the situation giving rise to it has been cured before such right is exercised.

 

(b)                        Any notice declaring Bonds due in accordance with § 12(a) shall be made by means of a written declaration in the German or English language delivered to the specified office of the Principal Paying Agent together with proof that such Bondholder at the time of such notice is a holder of the relevant Bonds by means of a certificate of his Custodian or in any other appropriate manner.

 

(c)                        If any Bond is declared due for early redemption by a Bondholder pursuant to this § 12, the Conversion Right in respect of such Bond may no longer be exercised by such Bondholder from the time of despatch by the Bondholder of its notice of termination to the Principal Paying Agent pursuant to § 12(b).

 

§ 13      Paying Agents, Conversion Agents and Calculation Agent

 

(a)                       Deutsche Bank Aktiengesellschaft will be the principal paying agent (the “ Principal Paying Agent ”, and together with any additional paying agent appointed by the Issuer in accordance with § 13(b), the “ Paying Agents ”). Deutsche Bank Aktiengesellschaft will also be the principal Conversion Agent (the “ Principal Conversion Agent ”, and together with any additional Conversion Agent appointed by the Issuer in accordance with § 13(b), the “ Conversion Agents ”). The address of the specified offices of Deutsche Bank Aktiengesellschaft is:

 

Deutsche Bank Aktiengesellschaft

Attention: Trust and Agency Services

Taunusanlage 12

60325 Frankfurt am Main

Federal Republic of Germany

 

Société Générale of 29, boulevard Haussmann, 75009 Paris, France, will be the calculation agent (the “ Calculation Agent ” and together with the Paying Agents and the Conversion Agents, the “ Agents ”).

 

Each Agent will be exempt from the restrictions set forth in § 181 BGB and similar restrictions of other applicable laws.

 

In no event will the specified office of any Agent be within the United States or its possessions.

 

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(b)                        The Issuer will procure that there will at all times be a Principal Paying Agent, a Principal Conversion Agent and a Calculation Agent. The Issuer is entitled to appoint other banks of international standing as Agents. Furthermore, the Issuer is entitled to terminate the appointment of any Agent. In the event of such termination or such bank being unable or unwilling to continue to act as Agent in the relevant capacity, the Issuer will appoint another bank of international standing as Agent in the relevant capacity. Such appointment or termination will be published without undue delay in accordance with § 14, or, should this not be possible, be published in another appropriate manner.

 

(c)                         All determinations, calculations and adjustments made by any Agent will be made in conjunction with the Issuer and will, in the absence of manifest error, be conclusive in all respects and binding upon the Issuer and all Bondholders.

 

Each Agent may engage the advice or services of any experts whose advice or services it deems necessary and may rely upon any advice so obtained. No Agent will incur any liability as against the Issuer or the Bondholders in respect of any action taken, or not taken, or suffered to be taken, or not taken, in accordance with such advice in good faith.

 

(d)                       Each Agent acting in such capacity, acts only as agent of the Issuer. There is no agency or fiduciary relationship between any Agent and the Bondholders.

 

§ 14      Notices

 

All notices concerning the Bonds to be given by the Issuer under these Terms and Conditions, except as stipulated in § 17(h), will be made as follows:

 

(a)                        The Issuer shall publish all its notices concerning the Bonds on its homepage (www.fmc-ag.de). Any such notice will be deemed to have been given when so published or despatched by the Issuer.

 

(b)                        If the Bonds are listed on any stock exchange and the rules of that stock exchange so require, the Issuer will make all its notices concerning the Bonds in accordance with the rules of the stock exchange on which the Bonds are listed.

 

(c)                         In addition the Issuer will deliver all its notices concerning the Bonds to the Clearing System for communication by the Clearing System to the Bondholders.

 

(d)                        A notice effected pursuant to § 14(a) to (c) above will be deemed to be effected on the day on which the first such communication is, or is deemed to be, effective.

 

§ 15      Issue of Additional Bonds

 

The Issuer reserves the right from time to time without the consent of the Bondholders to issue additional Bonds with identical terms (save for inter alia the issue date, the issue price and the first payment of interest), so that the same shall be consolidated, form a single issue with and increase the aggregate principal amount of these Bonds. The term “Bonds” shall, in the event of such increase, also comprise such additionally issued Bonds.

 

§ 16      Presentation Period, Prescription

 

The period for presentation of the Bonds pursuant to § 801(1) sentence 1 of the BGB will be reduced to ten years. The period of limitation for claims under the Bonds presented during the period for presentation will be two years calculated from the expiration of the relevant presentation period.

 

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§ 17                 Amendments to the Terms and Conditions, by resolution of the Bondholders; Joint Representative

 

(a)                        The Issuer may agree with the Bondholders on amendments to the Terms and Conditions by virtue of a majority resolution of the Bondholders pursuant to § 5 et seqq. Bond Act. In particular, the Bondholders may consent to amendments which materially change the substance of the Terms and Conditions, including such measures as provided for under § 5 paragraph 3 Bond Act, by resolutions passed by such majority of the votes of the Bondholders as stated under § 17(b) below. A duly passed majority resolution shall be binding equally upon all Bondholders.

 

(b)                        Except as provided by the following sentence and provided that the quorum requirements are being met, the Bondholders may pass resolutions by simple majority of the voting rights participating in the vote. Resolutions which materially change the substance of the Terms and Conditions, in particular in the cases of § 5 paragraph 3 numbers 1 through 9 Bond Act, may only be passed by a majority of at least 75 per cent. of the voting rights participating in the vote (a “ Qualified Majority ”).

 

(c)                         The Bondholders may pass resolutions in a meeting ( Gläubigerversammlung ) in accordance with § 5 et seqq. Bond Act or by means of a vote without a meeting ( Abstimmung ohne Versammlung ) in accordance with § 18 and § 5 et seqq. Bond Act.

 

(d)                        If resolutions of the Bondholders shall be made by means of a meeting the convening notice ( Einberufung ) will provide for further details relating to the resolutions and the voting procedure. The subject matter of the vote as well as the proposed resolutions shall be notified to the Bondholders together with the convening notice. Attendance at the meeting and exercise of voting rights is subject to the Bondholders’ registration. The registration must be received at the address stated in the convening notice no later than the third day preceding the meeting. As part of the registration, Bondholders must demonstrate their eligibility to participate in the vote by means of a special confirmation of their Custodian in accordance with § 19(d)(i)(A) and (B) hereof in text form and by submission of a blocking instruction by the Custodian stating that the relevant Bonds are not transferable from and including the day such registration has been sent until and including the stated end of the meeting.

 

(e)                         If resolutions of the Bondholders shall be made by means of a vote without a meeting the request for voting ( Aufforderung zur Stimmabgabe ) will provide for further details relating to the resolutions and the voting procedure. The subject matter of the vote as well as the proposed resolutions shall be notified to the Bondholders together with the request for voting. The exercise of voting rights is subject to the Bondholders’ registration. The registration must be received at the address stated in the request for voting no later than the third day preceding the beginning of the voting period. As part of the registration, Bondholders must demonstrate their eligibility to participate in the vote by means of a special confirmation of their Custodian in accordance with § 19(d)(i)(A) and (B) hereof in text form and by submission of a blocking instruction by the Custodian stating that the relevant Bonds are not transferable from and including the day such registration has been sent until and including the day the voting period ends.

 

(f)                          If it is ascertained that no quorum exists for the meeting pursuant to § 17(d) or the vote without a meeting pursuant to § 17(e), in case of a meeting the chairman ( Vorsitzender ) may convene a second meeting in accordance with § 15 paragraph 3 sentence 2 Bond Act or in case of a vote without a meeting the scrutineer ( Abstimmungsleiter ) may convene a second meeting within the meaning of § 15 paragraph 3 sentence 3 Bond Act. Attendance at the second meeting and exercise of voting rights is subject to the Bondholders’ registration. The registration must be received at the address stated in the convening notice no later than the third day preceding the second meeting. As part of the registration, Bondholders must demonstrate their eligibility to participate in the vote by means of a

 

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special confirmation of their Custodian in accordance with § 19(d)(i)(A) and (B) hereof in text form and by submission of a blocking instruction by the Custodian stating that the relevant Bonds are not transferable from and including the day such registration has been sent until and including the stated end of the meeting.

 

(g)                        The Bondholders may by majority resolution provide for the appointment or dismissal of a joint representative (the “ Joint Representative ”), the duties and responsibilities and the powers of such Joint Representative, the transfer of the rights of the Bondholders to the Joint Representative and a limitation of liability of the Joint Representative. Appointment of a Joint Representative may only be passed by a Qualified Majority if such Joint Representative is to be authorised to consent, in accordance with § 17(b) hereof, to a material change in the substance of the Terms and Conditions.

 

(h)         Any notices concerning this § 17 shall be made exclusively in accordance with the Bond Act.

 

(i)                           The provisions set out above in this § 17 applicable to the Bonds shall apply mutatis mutandis to the Subsidiary Guarantees.

 

§ 18     Issuer Substitution

 

(a)         Substitution

 

The Issuer may at any time, without the consent of the Bondholders, substitute for the Issuer any other company which is directly or indirectly controlled by the Issuer, as new issuer (the “ New Issuer ”) in respect of all obligations arising under or in connection with the Bonds with the effect of releasing the Issuer of all such obligations, if:

 

(i)                      the New Issuer assumes any and all obligations of the Issuer arising under or in connection with the Bonds and, if service of process vis-à-vis the New Issuer would have to be effected outside the Federal Republic of Germany, appoints a process agent within the Federal Republic of Germany;

 

(ii)                   the Issuer and the New Issuer have obtained all authorisations and approvals necessary for the substitution and the fulfilment of the obligations arising under or in connection with the Bonds;

 

(iii)                the New Issuer is in the position to pay to the Clearing System or to the Principal Paying Agent in Euro and without deducting or withholding any taxes or other duties of whatever nature imposed, levied or deducted by the country (or countries) in which the New Issuer has its domicile or tax residence all amounts required for the performance of the payment obligations arising from or in connection with the Bonds; and

 

(iv)               the Issuer irrevocably and unconditionally guarantees such obligations of the New Issuer under the Bonds on terms which ensure that each Bondholder will be put in an economic position that is at least as favourable as that which would have existed if the substitution had not taken place.

 

(b)         References

 

(i)        In the event of a substitution pursuant to § 18(a), any reference in these Terms and Conditions to

 

(A)         the Issuer shall be a reference to the New Issuer; and

 

(B)                        the Federal Republic of Germany (except in § 19) shall be a reference to the New Issuer’s country of domicile for tax purposes.

 

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(ii)                   In § 13 a further event of default shall be deemed to have been included; such event of default shall exist in the case that the guarantee pursuant to § 18(a)(iv) is or becomes invalid for any reasons.

 

§ 19      Final Clauses

 

(a)                        The form and content of the Bonds and the rights and duties of the Bondholders and the Issuer will in all respects be governed by the laws of the Federal Republic of Germany.

 

(b)         Place of performance is Frankfurt am Main, Federal Republic of Germany.

 

(c)                         Subject to any mandatory jurisdiction for specific proceedings under the Bond Act, and to the extent legally permitted, the courts of Frankfurt am Main, Federal Republic of Germany will have jurisdiction for any action or other legal proceedings arising out of or in connection with the Bonds.

 

(d)                        Any Bondholder may in any proceedings against the Issuer or to which the Bondholder and the Issuer are parties protect and enforce in his own name his rights arising under his Bonds on the basis of:

 

(i)        a certificate issued by his Custodian

 

(A)         stating the full name and address of the Bondholder;

 

(B)                        specifying an aggregate principal amount of Bonds credited on the date of such statement to such Bondholder’s securities account(s) maintained with his Custodian; and

 

(C)                        confirming that his Custodian has given a written notice to the Clearing System and the Principal Paying Agent containing the information specified in (A) and (B) and bearing acknowledgements of the Clearing System and the relevant account holder in the Clearing System; as well as

 

(ii)                   a copy of the Global Bond relating to the Bonds, certified as being a true copy by a duly authorised officer of the Clearing System or the Principal Paying Agent.

 

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Schedule

 

Description of the Convertible Bonds Hedge Transaction

 

1.          Background

 

This Schedule is a summary of the Convertible Bonds Hedge Transaction and is made for information purposes only. It has been prepared in order to provide Bondholders with information about the Convertible Bonds Hedge Transaction and the determination of payments which the Issuer is likely to receive following the Issuer’s exercise of a Hedge Position or, in certain circumstances, the Issuer’s termination of its Hedge Position. The information has been adjusted to fit with the terminology of the Bonds for ease of reference. The Convertible Bonds Hedge Transaction may be amended by the parties thereto from time to time. No party to the Convertible Bonds Hedge Transaction is obligated to take into account the interests of Bondholders when entering into, amending, making determinations under or using discretion in relation to the Convertible Bonds Hedge Transaction.

 

A copy of the pro forma documentation (where executed in the German language, translated into English) related to the Convertible Bonds Hedge Transaction excluding certain non-public or commercially sensitive information is available free of charge from the Issuer at the request of Bondholders. Should the parties to the Convertible Bonds Hedge Transaction amend the terms applicable to that transaction (except in the case of non-public or commercially sensitive information), the Issuer will provide notice to the Bondholders without undue delay in accordance with the terms and conditions of the Bonds that an amendment has been made and the amended pro forma documentation will be made available on request.

 

Bondholders do not have any recourse against any Hedge Counterparty to a Convertible Bonds Hedge Transaction.

 

2.          General description of the Convertible Bonds Hedge Transaction

 

The Issuer has entered into a Convertible Bonds Hedge Transaction as option buyer with Société Générale as option seller (the “ Bank ”). The total notional of the Convertible Bonds Hedge Transaction corresponds to the issue size of the Bonds. The transaction is designed to hedge the Issuer’s obligations in relation to the Bondholder’s Conversion Right under the Bonds. Under the Convertible Bonds Hedge Transaction, the Bank will pay to the Issuer per option (on the Issuer’s exercise) a cash amount equal to the relevant underlying Shares per option multiplied by the result of (i) the value of the Shares during a 40 trading day averaging period commencing on or about exercise minus (ii) the Share Reference Price multiplied by the sum of 1 and the conversion premium per option (the “ Strike Price ”). The amount paid to the Issuer under the Convertible Bonds Hedge Transaction if exercised at the corresponding time together with the Principal Amount is designed to match the Cash Amount under the Bond. The number of options underlying the Convertible Bonds Hedge Transaction is the same as the number of Bonds.

 

The Issuer may exercise the option on dates corresponding with the Conversion Exercise Dates and the conversion periods under the Bonds. The Convertible Bonds Hedge Transaction may be exercised in whole or in part and, if exercised in part, multiple times. The Issuer is under no obligation to exercise the Convertible Bonds Hedge Transaction. In particular, the Convertible Bonds Hedge Transaction will not automatically be exercised when a Bond is converted. If the Issuer does not exercise the Convertible Bonds Hedge Transaction in relation to a conversion of a Bond, the relevant Bondholder will nevertheless receive the Cash Amount from the Issuer.

 

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This will however not be the case where the Bank has gone insolvent prior to the Settlement Date and the Bank’s Insolvency (as defined in the Terms and Conditions) has led to a termination of the Convertible Bonds Hedge Transaction, in which case the Bondholder will receive the sum of the Principal Amount relating to the converted Bonds and the Hedge Payout Amount, being the payments actually received by the Issuer from the Bank in relation to the Convertible Bonds Hedge Transaction (corresponding to the Principal Amount relating to the converted Bonds). If an Insolvency of the Bank has occurred but the Convertible Bonds Hedge Transaction has not been terminated as a result of the Insolvency, the Issuer may elect to exercise the option under the Convertible Bonds Hedge Transaction and, in this case, the relevant Bondholder will receive the sum of the Principal Amount relating to the converted Bonds and the Hedge Payout Amount. To note, if the Convertible Bonds Hedge Transaction is terminated for reasons other than the Bank’s Insolvency, the Bondholder will receive the Cash Amount (unless the Bonds will be terminated early for this reason).

 

The Convertible Bonds Hedge Transaction was entered into pursuant to a confirmation subject to the German-law governed Master Agreement for Financial Derivatives ( Deutscher Rahmenvertrag für Finanz- und Termingeschäfte ) between the Issuer and the Bank (the “ DRV Master Agreement ”) and supplemented by the Equity Addendum ( Anhang für Wertpapierderivate ) (the “ DRV Equity Addendum ”). The confirmation and the DRV Equity Addendum are in the English language and the DRV Master Agreement is in the German language. Société Générale is appointed as the calculation agent under the Convertible Bonds Hedge Transaction.

 

The Issuer may transfer the Convertible Bonds Hedge Transaction to any of its Subsidiaries. References in this description to “Issuer” in the context of the Convertible Bonds Hedge Transaction shall include any Subsidiary to which the Issuer has transferred the Convertible Bonds Hedge Transaction.

 

3.                             Consistency of adjustments to the Conversion Price under the Bonds and the Strike Price under the Convertible Bonds Hedge Transaction

 

According to the terms and conditions of the Convertible Bonds Hedge Transaction, any adjustments or determinations made by the calculation agent under or in connection with the Convertible Bonds Hedge Transaction (in particular, but not limited to, (i) the determination of prices, (ii) dilutions and concentrations in case of share transactions, (iii) market disruption events, (iv) merger event and tender offer and (iv) nationalisation, delisting or change in law) will be consistent with such adjustments or determinations under the Bonds. In particular, the Strike Price under the Convertible Bonds Hedge Transaction will equal the conversion price under the Bonds. If the calculation agent under the Bonds has terminated the calculation agency agreement concerning the Bonds due to a serious cause in relation to the Issuer, and therefore the calculation agent under the Bonds is an entity other than the Bank (the “ Alternative Bond Calculation Agent ”), the Bank (in its capacity as calculation agent under the Convertible Bonds Hedge Transaction) will consult with the Alternative Bond Calculation Agent in relation to all adjustments and determinations to be made to the Strike Price to ensure that the Strike Price under the Convertible Bonds Hedge Transaction and the conversion price under the Bonds are consistent. If the agents are unable to agree on a determination or adjustment, each agent will appoint an independent expert to provide a quotation in relation to the relevant determination or adjustment and the arithmetic mean of these quotations be applied to adjust each of the Strike Price and the conversion price.

 

4.                             Other circumstances in which the amount received by the Issuer under the Convertible Bonds Hedge Transaction will affect the amount payable to the Bondholder under the Bonds

 

4.1        Nationalisation, Delisting or a Change in Law

 

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If a Nationalisation or a Delisting (as defined under the Bonds) occurs, an extraordinary event under the Convertible Bonds Hedge Transaction will also occur and the Convertible Bonds Hedge Transaction will terminate. The Bonds will also terminate in accordance with section 11(a)(i) of the conditions of the Bonds. If a Change in Law (as defined under the Bonds) occurs, an extraordinary event under the Convertible Bonds Hedge Transaction will also occur and the Issuer or the Bank will be entitled to terminate the Convertible Bonds Hedge Transaction. The Issuer has in this case a right to terminate the Bonds in accordance with section 11(a)(ii) of the Bonds.

 

If a termination of the Convertible Bonds Hedge Transaction arises in any of these cases, the Bank will pay to the Issuer an amount equal to the value of the Convertible Bonds Hedge Transaction, as determined by the relevant calculation agent in a commercially reasonable manner under the Convertible Bonds Hedge Transaction. The amount received by the Issuer under the Convertible Bonds Hedge Transaction will be taken into account for the purposes of determining the Early Redemption Amount payable by the Issuer under the Bonds, subject to the scenarios outlined in paragraph 4.3 below.

 

4.2        Dilution Events, Merger Events and Tender Offers

 

If an event (such as a dilution event (other than a distribution by the Issuer to its shareholders of a Cash Dividend), a Merger Event or a Tender Offer) occurs and this event leads to settlement of the options contracts as a result of application of the EUREX Corporate Action Procedures, the Convertible Bonds Hedge Transaction will also terminate. The Bank will pay to the Issuer an amount equal to the value of the Convertible Bonds Hedge Transaction, as determined by the calculation agent under the relevant Convertible Bonds Hedge Transaction in a commercially reasonable manner. The Bonds will also terminate in accordance with § 5(d) of the Terms and Conditions of the Bond. The amount received by the Issuer under the Convertible Bonds Hedge Transaction will be taken into account for the purposes of determining the Early Redemption Amount payable by the Issuer under the Bonds, subject to the scenarios outlined in paragraph 4.3 below.

 

Please note that the distribution of a Cash Dividend will lead to an adjustment of the Strike Price corresponding to the adjustment to the Conversion Price as provided under the Bonds.

 

4.3        Early Redemption Amount

 

The Early Redemption Amount payable by the Issuer in the scenarios outlined in paragraph 4.1 and 4.2 above, is the sum of (i) the Principal Amount plus any unpaid interest accrued up until but excluding the Early Redemption Date and (ii) the payment(s) to be received by the Issuer from the Bank, or in the case of the Bank’s Insolvency, the payments actually received by the Issuer from the Bank, following the termination of the Issuer’s Hedge Position pursuant to the Convertible Bonds Hedge Transaction.

 

However, if the Issuer has not exercised any corresponding termination right under the Convertible Bonds Hedge Transaction (except in the case of the Bank’s Insolvency) or if the Issuer does not hold a Hedge Position pursuant to the Convertible Bonds Hedge Transaction with respect to the full aggregate Principal Amount of all Bonds redeemed (except due to the Bank’s Insolvency) immediately prior to the Relevant Date, the Bondholder will receive the higher of the Principal Amount per Bond plus unpaid interest accrued to but excluding the Early Redemption Date and the Fair Value of the Bond and there will be no reference to the value of the Convertible Bonds Hedge Transaction in the determination of the Early Redemption Amount to be paid. To note, if the Convertible Bonds Hedge Transaction has terminated at any time prior to the Relevant Date due to the Insolvency of the Bank, the Bondholder will receive the Principal Amount plus any unpaid interest accrued up until but excluding the Early Redemption Date and the payment(s) actually

 

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received by the Issuer from the Bank following the termination of the Issuer’s Hedge Position pursuant to the Convertible Bonds Hedge Transaction. Consequently, Bondholders may only receive the Principal Amount plus unpaid, accrued interest in such a scenario, if the insolvent Bank is not able to make any payment following a close-out of the Convertible Bonds Hedge Transaction.

 

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